HICBC net adjusted income pension tax relief

jon11

In the child benefit article in relation to working out net adjusted income when money is paid into a Personal Pension it states '...and £133 for every £80 you pay in if you pay tax at 40%'.
From what I've understood from researching elsewhere and example calcs done on HRMC web site I thought only basic relief 20% was used for adjusted net income calc even for 40% tax payers.
It is different if the pension payment is made directly from gross salary.

zagfles

The article's wrong or quoted out of context. Link?

If you pay in £80 to a personal pension operating RAS (relief at source), the pension company will claim £20 tax relief and the gross contribution is £100. That applies to everyone.

If you're a higher rate taxpayer you can claim an extra £20 tax relief (maybe less if you're only just in higher rate). But whatever, the gross contribution is always £100 and that is the amount your ANI is reduced by. Any extra tax rebate goes to you not the pension, therefore can be thought as reducing your net contribution, ie the £100 gross contribution has only cost you £60.

The article probably means that a higher rate taxpayer could make a £133 gross contribution at a cost to them of £80. But they would have to actually pay in £106.40, the pension provider would claim £26.60 tax relief, and they could claim further tax relief of £26.60, so the net cost to them would be £79.80, about £80.