Teacher's Pension (TPS), faster accrual arrears and reclaiming tax

Johng5674

Hi

I'm really hoping someone can give me some advice with regards to getting a tax rebate for paying a TPS faster accrual arrears.

I am in the Teacher's Pension Scheme and have always paid extra for Faster Accrual. Normally this comes out of my gross salary and is all sorted out between TPS and my HR department. However, earlier this year, TPS contacted me to say that I had not paid my Faster Accrual for the year 2020-2021. I checked, and this is correct - HR didn't set it up, and I didn't notice (must have been something more pressing that year!).

I've paid the arrears out of savings (ie taxed income), and have contacted HMRC to claim the tax back. Having provided all of the details from TPS about the arrears, as well as my payslips which show that in normal years, the faster accrual comes from my gross salary), they say that no tax can be claimed because additional contributions are paid from net pay, or that because I'm not in the high tax bracket, I cannot claim any rebate. 

Neither of these explanations apply in my specific case, as far as I can tell. I would expect HMRC to be well versed in a large defined-benefits pension scheme, so I'm not really sure who's correct. I would also be amazed if I am the first person who has had to pay arrears for faster accrual because HR didn't set it up, or didn't set it up correctly, so I'm really hoping that someone on here would have some insight into whether I can claim any tax back!

I'd really appreciate any comments that people may have about all this!

Dazed_and_C0nfused

HMRC are notorious for misunderstanding this, it sounds like they think you have made a RAS (relief at source) contribution. 

Which to be fair probably covers 99.9% of the pension tax relief claims they have to deal with.

Are you trying to claim tax relief for the current tax year i.e. the tax year the contribution was paid in?

xylophone

See this thread

https://forums.moneysavingexpert.com/discussion/6311915/can-i-claim-back-the-tax

Johng5674

Dazed_and_C0nfused said:

HMRC are notorious for misunderstanding this, it sounds like they think you have made a RAS (relief at source) contribution. 

Which to be fair probably covers 99.9% of the pension tax relief claims they have to deal with.

Are you trying to claim tax relief for the current tax year i.e. the tax year the contribution was paid in?

Thanks for your comment. I had assumed that because the arrears were from 2020-21, that I would be claiming tax relief from that year (because that's when it should have been paid), but perhaps it should be the current year (as this is when I've paid it).

I'm not sure if it makes a difference, but I was in the basic tax category in 2020-21, but now in the higher bracket this year.

If you think I should be able to get tax relief, do you have any suggestions how I can word this really clearly for HMRC? I've called them a few times, and have sent two letters, but seem to get two sentence replies which seem incorrect.

Johng5674

xylophone said:

See this thread

https://forums.moneysavingexpert.com/discussion/6311915/can-i-claim-back-the-tax

Thanks - I'll get reading

Narrowboat

I don't have a solution for you, but at least I can offer sympathy. I make one-off Additional Pension Benefit payments to my teachers pension. These are always made from post-tax income, so always need the tax reclaiming from HMRC. Your situation is a little more niche as it relates to arrears for faster accrual, whereas all teachers who pay APB will need to contact HMRC. I have done this for three years now but every time I feel that HMRC have no idea what I am requesting and that I am the first person ever to ask for a tax refund on teacher APBs.

Their first reaction is usually that you are not a higher rate tax payer so can't claim tax relief. When writing to HMRC for last year's refund, I therefore stated in capital letters that I am not claiming higher rate tax relief, but instead claiming basic rate tax relief for a post-tax payment to a scheme not set up for RAS. This helped in the sense that HMRC did not send their usual "not a higher rate tax payer" response. But it meant that the person dealing with it had no idea what to do, so he sent it to their "Technical Team". But this team doesn't deal with small amounts so took no action. 8 months and several phone calls later, I am still awaiting a response. I eventually did receive refunds for my two previous claims, but the lack of understanding at HMRC seems to be getting worse. I agree HMRC should be well versed in a pension scheme that has over half a million active members, but sadly they don't seem to have a clue.

Dazed_and_C0nfused

Narrowboat said:

I don't have a solution for you, but at least I can offer sympathy. I make one-off Additional Pension Benefit payments to my teachers pension. These are always made from post-tax income, so always need the tax reclaiming from HMRC. Your situation is a little more niche as it relates to arrears for faster accrual, whereas all teachers who pay APB will need to contact HMRC. I have done this for three years now but every time I feel that HMRC have no idea what I am requesting and that I am the first person ever to ask for a tax refund on teacher APBs.

Their first reaction is usually that you are not a higher rate tax payer so can't claim tax relief. When writing to HMRC for last year's refund, I therefore stated in capital letters that I am not claiming higher rate tax relief, but instead claiming basic rate tax relief for a post-tax payment to a scheme not set up for RAS. This helped in the sense that HMRC did not send their usual "not a higher rate tax payer" response. But it meant that the person dealing with it had no idea what to do, so he sent it to their "Technical Team". But this team doesn't deal with small amounts so took no action. 8 months and several phone calls later, I am still awaiting a response. I eventually did receive refunds for my two previous claims, but the lack of understanding at HMRC seems to be getting worse. I agree HMRC should be well versed in a pension scheme that has over half a million active members, but sadly they don't seem to have a clue.

A sad state of affairs really, particularly given HMRC staff themselves could make similar contributions to the Alpha scheme.

Universidad

Dazed_and_C0nfused said:

A sad state of affairs really, particularly given HMRC staff themselves could make similar contributions to the Alpha scheme.

I think many folks on this forum would be amazed at how little the average person with a public sector defined benefits pension scheme is aware of their options, or its value.

xylophone

 I have done this for three years now but every time I feel that HMRC have no idea what I am requesting and that I am the first person ever to ask for a tax refund on teacher APBs.

You certainly aren't the first poster to comment on this problem - we've had CS/TPS/LGPS/NHS...... see threads cited in my post above,

In short see

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye130025

Example: Relief due on gross superannuation payments

For 2008 to 2009 individual has made a £1,000 gross lump sum payment to a superannuation scheme and relief has not been given through the net pay arrangement and you have established that tax relief is due using the Pension Tax Manual (see Pension Tax Manual (PTM) at PTM044240). Generally in these cases tax relief is given through the Self Assessment system.
 

If an employee requests that tax relief be given in their tax code for the current year, you should
 

• Enter the gross amount paid £1,000 as Concessional relief
• Make a Contact History note of the lump sum payment
• Set the Inhibit Automatic Reconciliation indicator for CY
• Create a BF with review date in CY+1

And have a look at this archived page from a time when when HMRC employees seemed to be properly trained.

https://webarchive.nationalarchives.gov.uk/ukgwa/20110617043205/http://www.hmrc.gov.uk///pensionschemes/faqs/taxrel.htm

Public Sector Schemes

Q. I have paid a lump sum contribution into my scheme. Am I entitled to tax relief and if so how do I obtain it?

A. Tax relief is allowed on total contributions you pay in any tax year which fall within the 15% earnings limit. You are automatically given full tax relief through the PAYE system on normal compulsory contributions deducted from your salary. But where you pay a lump sum, relief is not automatically given and the onus is on you to claim it.

Your scheme administrator should give you a letter showing the date and amount of any lump sum contributions. If you do not complete an annual tax return, send a copy of the letter to your tax office and ask them to allow you the tax relief. You will receive it at the end of the tax year. (Your tax office is shown on your notice of PAYE coding, or your employer can give you details.)

If you are required to complete a Self Assessment tax return you must keep the letter from the administrator and claim any further tax relief yourself on your tax return. See main question 14 on the return and complete box 14.16. (That is the box number on the return for the year ended 5.4.00 - numbers may change slightly for future years.) Read the matching guidance note carefully - you are responsible for only claiming tax relief within the 15% limit, even if your scheme rules have allowed you to pay contributions in excess of that. You must remember to take account of any normal contributions paid during the same tax year for which you have received relief through PAYE before calculating any further relief due on lump sum contributions. You can ask the tax office for advice.

xylophone

A sad state of affairs really, particularly given HMRC staff themselves could make similar contributions to the Alpha scheme.

I think many folks on this forum would be amazed at how little the average person with a public sector defined benefits pension scheme is aware of their options, or its value.

See https://forums.moneysavingexpert.com/discussion/comment/77626031/#Comment_77626031

Johng5674

Thanks for all your advice, and third time lucky, by very much spelling out that this isn't trying to claim back tax from higher rate earnings and that this is the DB Teachers pension scheme which is paid from my gross salary, I've received a rebate (8 months since writing)