No tax relief on my current pension?

hugheskevi

DE_612183 said:

I would say that they are not deducting the pension - this is worrying - have you spoken to any other employees?

I presume they are in the same scheme.

As for rectification, then the money has been invested correctly - what you have got is that you've paid too much tax.

HMRC will have to rectify that - as to interest, I'm not sure if HMRC do that.

What I don't get is that the £99.55 is that the employer pension contribution?

How much is deducted for you - 5% of £3008 is about £150

The OP looks to be under statutory minimum contributions, ie paying 5% member contributions on monthly income between £520 and their earnings of £3008.85. That is £124.44.

If made under net pay, the £124.44 should have been deducted from taxable earnings.

If made under relief at source, £99.55 should have been sent to the provider, who would apply basic rate relief and gross it up to £124.44.

So it appears that the employer is treating it as RAS and NOW as net pay, so both too much tax has been paid, and not enough has been invested in the pension.

Clcatt91

DE_612183 said:

Clcatt91 said:

Hello,

Yes I can tell you my most recent pay slip:

Gross pay - £3008.85
Taxable pay - £3008.85
PAYE - £392
Pension £99.55

I'm correct right? They haven't been deducting the pension?

If they have to correct this, will they also make up for the loss of interest?

I would say that they are not deducting the pension - this is worrying - have you spoken to any other employees?

I presume they are in the same scheme.

As for rectification, then the money has been invested correctly - what you have got is that you've paid too much tax.

HMRC will have to rectify that - as to interest, I'm not sure if HMRC do that.

What I don't get is that the £99.55 is that the employer pension contribution?

How much is deducted for you - 5% of £3008 is about £150

No that is my contribution, it is because it is done on qualifiable earnings. From what I know its so the company can pay the bare minimum into my pension. 

With tax relief, my monthly contribution should be £124.40. 

cloud_dog

Dazed_and_C0nfused said:

cloud_dog said:

You are under a Relief at Source scheme, which means the deduction is 4% with the tax relief (another 1%) being added by the pension provider.

In your provider's pension portal you should see three entries, employee, tax relief, and employer.

Additionally, they are only paying pension contributions based on Qualifying Earnings.

https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension/declare-your-compliance/ongoing-duties-for-employers-/earnings-thresholds

Can you add the link to show Now Pensions operate RAS?

Annoyingly, the calculations work out for RAS under QE.

EDIT:  I wonder if this is a simple payroll / administration issue, e.g. someone has interpreted the scheme type of 'Net Pay' as meaning to be taken out of the OPs 'net pay'?  I have encountered that situation on another forum.

xylophone

As soon as I noticed it, I emailed our company accounts department. However, our payroll is done by a separate company, and so they have forwarded my query to them on my behalf. I cant contact the company personally about my own payslip. Its been over a week and they haven't responded. 

Expecting a reply within a week is over optimistic - nevertheless, in your case certainly (and very likely in the case of other employees) 

 there  would appear to be  a serious and ongoing error.

If you have had no reply by the end of this month, consider writing a formal letter  to the Accounts Manager setting out the exact nature 

of the problem (and copying it to the  MD of your company).

https://www.rsmuk.com/insights/employment-matters/employment-tax/net-pay-or-relief-at-source-tax-relief-on-employee-contributions-and-workplace-pensions

Albermarle

cloud_dog said:

Dazed_and_C0nfused said:

cloud_dog said:

You are under a Relief at Source scheme, which means the deduction is 4% with the tax relief (another 1%) being added by the pension provider.

In your provider's pension portal you should see three entries, employee, tax relief, and employer.

Additionally, they are only paying pension contributions based on Qualifying Earnings.

https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension/declare-your-compliance/ongoing-duties-for-employers-/earnings-thresholds

Can you add the link to show Now Pensions operate RAS?

Annoyingly, the calculations work out for RAS under QE.

EDIT:  I wonder if this is a simple payroll / administration issue, e.g. someone has interpreted the scheme type of 'Net Pay' as meaning to be taken out of the OPs 'net pay'?  I have encountered that situation on another forum.

Well naming it a Net Pay scheme, when actually it comes out of gross salary, could only have been thought up by a committee,  as it seems almost deliberately confusing ! 

xylophone

NOW employer page is quite clear

https://www.nowpensions.com/help-and-support/employers/faqs/employers-responsibilities/how-does-tax-relief-work-in-the-scheme/

How does tax relief work in the Scheme?

We operate a net pay scheme. Pension contributions are deducted from employees’ pay and paid over to the Scheme before income tax is calculated.

You’ll need to:

• calculate pension contributions on gross (before tax) pay and
• work out your employees’ income tax after their pension contributions have been deducted.

As a result your employees who are taxpayers won’t pay any income tax on their pension contributions. They automatically get full tax relief.

Employees who don’t earn enough to pay tax don’t normally get tax relief – but we’ve set up our Scheme so they don’t miss out. We have a tax top-up scheme so employees who don’t pay tax can claim tax relief and have it added to their pension savings in the Scheme. (Employees must claim this themselves – it’s not something you can do on their behalf as their employer.)

The People's Pension for Employers is quite minatory in tone

How to set up tax relief correctly

You need to check that your tax relief settings for your employees’ pension contributions match on your payroll and your pension scheme. If your payroll and pension scheme don’t match, it’ll mean more work for you and additional submissions to HMRC.

HMRC are vigilant in monitoring tax relief – in some cases revealing and fining employers who have managed tax relief incorrectly. Also, if the tax settings are incorrect, it could mean that the contributions are less than the minimum legal requirement.

When you sign up, we’ll ask you to confirm that your payroll has been set up to deduct employee pension contributions on the correct tax basis. We’ll also ask you to check and confirm you understand the tax basis every year.

 Which being interpreted,

"Don't blame us Guv if you get it wrong - just remember HMRC know where you live......"

Clcatt91

This is interesting. So the company could get in trouble? 

Marcon

Clcatt91 said:

This is interesting. So the company could get in trouble? 

Only in extreme cases.

You'll earn yourself far more kudos in the eyes of your employers if you behave coolly, sensibly and patiently while they sort out what is going to be a major headache, as opposed to stirring up your fellow employees (should such a move even be in your thoughts...). It will be sorted out, but it won't be quick.

Albermarle

You may wish to send them the link above .

Clcatt91

Marcon said:

Clcatt91 said:

This is interesting. So the company could get in trouble? 

You'll earn yourself far more kudos in the eyes of your employers if you behave coolly, sensibly and patiently while they sort out what is going to be a major headache, as opposed to stirring up your fellow employees (should such a move even be in your thoughts...). 

I have already told a few people at work, when I was trying to work out if it was just me or if I had made a mistake, but to be honest most of them aren't that fussed because it's the pension, not money owed to them now. It actually quite surprised me to be honest, apparently I'm the only person who's outraged about lost money. 

I shall take the advice on board, it's not like they can ignore the issue now I've mentioned it. And If any of the people who I've told ask whats happening, il just say they're working on it.