Help with higher rate tax relief on my workplace DC pension contributions.

lightbody

Hi,

I'm confused by my company pension, and need some help from someone please... 

There are three parts to my monthly company DC pension plan contributions.

• My company contributes a fixed %, that I can't affect, that comes out pre-tax and doesn't appear on my payslip at all, it just appears in my pension.  Thank you company!
• The second bit is a fixed % that I also can't alter, that is a fixed employee contribution.  This shows up on my payslip.
• The third bit is the optional AVC, that I have been making for a few years and want to increase, which appears on my payslip too.

Question 1
I'm sure I can reclaim my tax on the AVC component, but I'm not sure about the second part, and my payslip doesn't give me much clue... 

Question 2
I don't currently do a tax return, because my only income is via PAYE.  Do I need to start doing one to reclaim this tax, or can I just write to them?  I've read conflicting information about this, even on HMRC's own website!

I've read a lot online about all of this, but my pension setup seems a bit unusual.  There's no concept of "matching" either.

Thanks very much.

Albermarle

You need to clarify whether the main pension is a Defined Benefits Pension, or a Defined Contributions pension, as a first step. 
Pension basics | Help with pension basics | MoneyHelper

lightbody

Albermarle said:

You need to clarify whether the main pension is a Defined Benefits Pension, or a Defined Contributions pension, as a first step. 
Pension basics | Help with pension basics | MoneyHelper

Hi - I put that in the topic heading - its a DC.  Thanks!

dunstonh

lightbody said:

Albermarle said:

You need to clarify whether the main pension is a Defined Benefits Pension, or a Defined Contributions pension, as a first step. 
Pension basics | Help with pension basics | MoneyHelper

Hi - I put that in the topic heading - its a DC.  Thanks!

It is unusual to have an AVC with a DC occupational pensions.  Normally AVCs exist because you cannot top up a DB scheme.  With DC schemes, most allow you to adjust the contributions to your preference and don't need an AVC running alongside it.

AVCs often have different tax handling to the main scheme.   So, you cannot assume that the AVC has the same tax relief method as the main scheme.

Brie

Does your company offer salary sacrifice on your pension contributions?  

I don't think you need to be reclaiming anything (happy to be corrected) unless you are in a high tax bracket.  I certainly never claimed anything for the few AVC payments I made (maybe I should have) but I've never been in the higher tax brackets at all and my last big company scheme was doing salary sacrifice since 2008 so never seemed significant.

zagfles

You need to understand how your contributions taken, net pay, relief at source, or salary sacrifice. Unless it's RAS you're already getting full tax relief. If RAS then you may need to claim.

What are you being taxed on? Are you being taxed on your full gross pay, or your gross pay minus your pension contributions? If you don't know how to work this out (it amazes me how few people do), post the numbers from a couple of consecutive payslips inc pay, tax, NI, pension conts, taxable pay to date, pay to date, and your tax code.

MallyGirl

I have a workplace pension that is salary sacrifice DC. If I pay 5% my employer pays 10%. I choose to contribute an additional 45% and that is labelled on my payslip as AVC.
It also lists ytd EE pension and ER pension separately even though salsac is actually all ER pension.

lightbody

zagfles said:

You need to understand how your contributions taken, net pay, relief at source, or salary sacrifice. Unless it's RAS you're already getting full tax relief. If RAS then you may need to claim.

What are you being taxed on? Are you being taxed on your full gross pay, or your gross pay minus your pension contributions? If you don't know how to work this out (it amazes me how few people do), post the numbers from a couple of consecutive payslips inc pay, tax, NI, pension conts, taxable pay to date, pay to date, and your tax code.

Thanks for that - its helpful to know that this is what I should be doing.  Let me see if I can figure it out.

I should have added that I am in the tax bracket (I'm in Scotland where its now significantly easier to be in this than in England).  Sorry I wasn't clearer, I thought it was implied by the question.  Thanks for the helpful replies so far, which are giving me some steer.  I'm going to speak to my HR department on Monday, although I'm not convinced any of them know much either!

squirrelpie

MallyGirl said:

It also lists ytd EE pension and ER pension separately even though salsac is actually all ER pension.

But is the value for EE pension anything other than zero?

squirrelpie

Brie said:

I don't think you need to be reclaiming anything (happy to be corrected) unless you are in a high tax bracket.

The OP specifically states higher-rate in the subject.

Dazed_and_C0nfused

Brie said:

Does your company offer salary sacrifice on your pension contributions?  

I don't think you need to be reclaiming anything (happy to be corrected) unless you are in a high tax bracket.  I certainly never claimed anything for the few AVC payments I made (maybe I should have) but I've never been in the higher tax brackets at all and my last big company scheme was doing salary sacrifice since 2008 so never seemed significant.

There's never anything to claim when the contributions are made using either net pay or salary sacrifice.

Net pay as the contribution reduces your taxable income before PAYE is operated and salary sacrifice because they are employer contributions and no pension tax relief is due on employer contributions.

Intermediate rate (Scottish) or higher rate payers could be due a tax reduction when making relief at source contributions.