Self assessment and HRT relief on pensions

chockydavid1983

Hi everyone

I recently started to have to do self assessment and was wondering if tax relief from pensions is all done automatically through that now? In previous years, I’ve had to call separately to claim higher rate tax relief on my pension contributions.

1) I have a work pension scheme where my contributions are paid in from my pre tax salary and the pension scheme adds basic rate tax relief (that amount is then matched by my employer).

2) I also have a SIPP that I contribute to and that will also add basic rate tax relief.

In the entry for “Payments to registered pension schemes (also known as PPR) where basic rate tax relief will be claimed by your pension provider (called 'relief at source'). Enter the payments and basic rate tax”:

Do I total up the amounts I’ve paid in for 1 and 2? Or is this just for my SIPP and my work pension is handled differently?

Thanks,

Chris.

Dazed_and_C0nfused

chockydavid1983 said:

Hi everyone

I recently started to have to do self assessment and was wondering if tax relief from pensions is all done automatically through that now? In previous years, I’ve had to call separately to claim higher rate tax relief on my pension contributions.

1) I have a work pension scheme where my contributions are paid in from my pre tax salary and the pension scheme adds basic rate tax relief (that amount is then matched by my employer).

2) I also have a SIPP that I contribute to and that will also add basic rate tax relief.

In the entry for “Payments to registered pension schemes (also known as PPR) where basic rate tax relief will be claimed by your pension provider (called 'relief at source'). Enter the payments and basic rate tax”:

Do I total up the amounts I’ve paid in for 1 and 2? Or is this just for my SIPP and my work pension is handled differently?

Thanks,

Chris.

You seem to be contradicting yourself so it's not clear.

SIPP contributions made under the RAS method should be included on your tax return but the work pension contributions highlighted in bold can't be deducted pre tax AND have basic rate relief added by the pension scheme.

You need to be clear which it is, are they net pay contribution i.e. salary £3,000 pension contribution £300 and taxable pay £2,700.  With no relief added by the pension company.

Or salary £3,000, taxable pay also £3,000 and £300 paid under RAS?

Marcon

chockydavid1983 said:

Hi everyone

I recently started to have to do self assessment and was wondering if tax relief from pensions is all done automatically through that now? In previous years, I’ve had to call separately to claim higher rate tax relief on my pension contributions.

1) I have a work pension scheme where my contributions are paid in from my pre tax salary and the pension scheme adds basic rate tax relief (that amount is then matched by my employer).

If your contributions are paid from your gross salary, then you've effectively already received full tax relief at your highest rate (because pension contributions reduce your salary before it is taxed, although the level of NI you pay is the same) and there's nothing for  the scheme to add by way of tax relief and nothing for your employer to 'match'.

Are you sure you aren't describing salary sacrifice, whereby your contractual salary is reduced by £x and your employer pays £x + their own employee contribution (which is also paid gross, so no tax relief involved)? Or possibly just misunderstanding what happens?

Alternatively, is it just a typo and should have read '....contributions paid in from post tax salary'?

chockydavid1983

Thanks both, appreciate your responses.
Yes, I can see the contradiction - I'll check my payslip and pension statement to see which it is.
It's definitely not salary sacrifice as I remember asking about that a while ago and it's not available unfortunately.

Thanks,
Chris.

Dazed_and_C0nfused

chockydavid1983 said:

Thanks both, appreciate your responses.
Yes, I can see the contradiction - I'll check my payslip and pension statement to see which it is.
It's definitely not salary sacrifice as I remember asking about that a while ago and it's not available unfortunately.

Thanks,
Chris.

Presume you are aware but just in case not, you would never include salary sacrifice contributions on your Self Assessment return as you don't get any tax relief on them.

They are actually employer contributions and tax relief is only available on contributions you make.

chockydavid1983

Thanks Dazed. Yes, I am aware that only my own contributions count but definitely worth asking! I consider myself pretty financially savvy but have always found pensions tax relief a little confusing.
In terms of my original post, I've now checked my pay slip and my work pension scheme is relief at source (RAS), i.e. I contribute a certain amount net and then the gross amount is what my employer matches.
So I think what that means is that I should include my contributions into my work pension scheme on my self assessment tax return, which will then give me the higher rate tax relief?

Thanks,
Chris.

Dazed_and_C0nfused

Yes, you include RAS contributions you've made on your Self Assessment return.

If you look at the calculation you will a line, underneath details of your income but before the tax liability is calculated, showing that your basic rate band had been increased.

That is how you get the higher rate relief.

Albermarle

The figure you have to enter in the tax return is your gross contributions, so including the basic rate tax relief that the pension provider will have added on.

chockydavid1983

Thanks both, it's great that this can all be handled on my self assessment tax return.
Thanks also for the explanation of how you get he higher rate relief.

Regards,
Chris.

Albermarle

chockydavid1983 said:

Thanks both, it's great that this can all be handled on my self assessment tax return.
Thanks also for the explanation of how you get he higher rate relief.

Regards,
Chris.

The first year you do it, you will get a rebate for any higher rate tax relief due.
Then HMRC will adjust your tax code, on the basis you will make similar pension contributions the following year.
This means you will pay less tax each month, but there will be no rebate due later.

chockydavid1983

Ah I see, thank you!