Salary Sacrifice Pension contributions

Hi, I am employed and pay TAX via PAYE, my employer has a salary sacrifice scheme. My earnings take me above the threashold to submit a tax return and for year 2021- 2022 I had an additional tax bill of around 2.5k. To try and prevent this last year I increased my pension contributions to 20% to bring my taxable earning below the threashold but after filling my return for this year I still have a bill for 5k!
Looking at the calculation from HMRC it seems they are calculating my tax 20% & 40% on my total earnings including my 20% pension contributions.

Im probably missing something here but cannot seem to find an answer on Google.

Do i need to add my pension contributions to my tax return, any explanation would be appreciated! 

thanks in advance

 

Comments

  • What are your earnings according to your P60?
  • DJH123412 said:
    Hi, I am employed and pay TAX via PAYE, my employer has a salary sacrifice scheme. My earnings take me above the threashold to submit a tax return and for year 2021- 2022 I had an additional tax bill of around 2.5k. To try and prevent this last year I increased my pension contributions to 20% to bring my taxable earning below the threashold but after filling my return for this year I still have a bill for 5k!
    Looking at the calculation from HMRC it seems they are calculating my tax 20% & 40% on my total earnings including my 20% pension contributions.

    Im probably missing something here but cannot seem to find an answer on Google.

    Do i need to add my pension contributions to my tax return, any explanation would be appreciated! 

    thanks in advance

     
    Did you make sure your tax code was as accurate as possible?

    Have you reported the correct taxable income on your tax return?

    You don't mention salary sacrifice contributions on a tax return as they are employer contributions and as such you are not entitled to any pension tax relief on them.
  • DJH123412
    DJH123412 Posts: 3
    First Post First Anniversary
    Newbie
    edited 22 January at 2:51PM


    What are your earnings according to your P60?


    hi, my P60 earnings are the same as quoted on my TAX return



    DJH123412 said:
    Hi, I am employed and pay TAX via PAYE, my employer has a salary sacrifice scheme. My earnings take me above the threashold to submit a tax return and for year 2021- 2022 I had an additional tax bill of around 2.5k. To try and prevent this last year I increased my pension contributions to 20% to bring my taxable earning below the threashold but after filling my return for this year I still have a bill for 5k!
    Looking at the calculation from HMRC it seems they are calculating my tax 20% & 40% on my total earnings including my 20% pension contributions.

    Im probably missing something here but cannot seem to find an answer on Google.

    Do i need to add my pension contributions to my tax return, any explanation would be appreciated! 

    thanks in advance

     
    Did you make sure your tax code was as accurate as possible?

    Have you reported the correct taxable income on your tax return?

    You don't mention salary sacrifice contributions on a tax return as they are employer contributions and as such you are not entitled to any pension tax relief on them

    Thanks

    My TAX code was higher as I took the opportunity to pay the last tax bill over the year rather than in one go.

    I reported my P60 earnings on the tax return

    I though the idea was if you earn say 130k and you pay 30k salary sacrifice your taxed on 100k and not the 130k? 


  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,797
    First Anniversary First Post Name Dropper
    Forumite
    edited 14 November 2023 at 9:30PM
    I though the idea was if you earn say 130k and you pay 30k salary sacrifice your taxed on 100k and not the 130k? 
    That's basically true, but your P60 would reflect earnings of £100k not £130k.

    You don't include employer contributions on a tax return as you cannot claim relief on them.  And if you did you would be double counting them as they are already reflected in your reduced taxable earnings.

    You need to provide all details from your return really for anyone to help.

    NB.  Paying tax owed from an earlier year would result in a lower tax code, not a higher one.
  • Thanks sorry yes a lower tax code, (1157L) I will speak with the team at our payroll to see if they can explain why my total earnings on my P60 include my pension contributions.
     
    The tax bill previously has been because of the reduction of my personal allowance for earning over 100k, so to bring my earnings down I increased my pension contributions, but it still looks like my personal allowance has been hit.  
Meet your Ambassadors

Categories

  • All Categories
  • 341.8K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.2K Spending & Discounts
  • 233.9K Work, Benefits & Business
  • 606.1K Mortgages, Homes & Bills
  • 172.5K Life & Family
  • 246.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards