Tax relief on lump sum AVC

PensionMan123

I previously worked for a private sector employer who had a Defined Contribution scheme. I once paid a lump sum (from my post-tax pay) to that pension scheme. It is listed as an Additional Voluntary Contribution. I believe that I should be able to get tax relief? I previously tried some time ago with HMRC and got nowhere. I cant remember their exact explanation.    

[Deleted User]

PensionMan123 said:

I previously worked for a private sector employer who had a Defined Contribution scheme. I once paid a lump sum (from my post-tax pay) to that pension scheme. It is listed as an Additional Voluntary Contribution. I believe that I should be able to get tax relief? I previously tried some time ago with HMRC and got nowhere. I cant remember their exact explanation.    

The pension provider relevant to the AVC will automatically claim basic rate tax relief. For example, a contribution of £2000 will be grossed up to £2500. 

If you are a higher rate taxpayer, paying 40% tax on at least £2500 you can claim an additional 20% relief (£500) by informing HMRC. Otherwise, you can claim the additional relief at 20% on the amount of earnings which attracted 40% tax. 

When was the payment made?

Dazed_and_C0nfused

Lump sum contributions where no tax relief is given at the point of payment aren't uncommon in public sector schemes aren't that unusual but it going to a DC pot rather than buying DB benefits possibly is more unusual.

Which tax year did you make this contributions in?

PensionMan123

I am a standard rate taxpayer. I think it was 2021/2022 year, if not 2020/21.                                                   

Dazed_and_C0nfused

PensionMan123 said:

I am a standard rate taxpayer. I think it was 2021/2022 year, if not 2020/21.                                                   

Have you got evidence of the contribution and that no tax relief was automatically given?

Roughly how much tax did you pay in the tax year in question and how much was the contribution?

PensionMan123

it was in year 2020/21. what I might do is speak to the pension provider and see of they can clarify

Dazed_and_C0nfused

PensionMan123 said:

it was in year 2020/21. what I might do is speak to the pension provider and see of they can clarify

Very sensible.  As it was a private sector AVC there is a very strong chance that the pension company automatically added basic rate tax relief to your payment.

This would be 25% of what you paid, equivalent to 20% of the gross contribution.

For example you pay £500 and they add £125.

Gross contribution is £625.  Basic rate relief on £625 is £125.