Confused about increasing pension contributions in order to lower tax bracket

johnstev

Dazed_and_C0nfused said:

johnstev said:

[Deleted User] said:

Your gross taxable income IS what is shown on your P60. Pension contributions do not reduce your taxable income but they do decrease the amount of tax that you will pay at 40%. 

An annual contribution by you, for example, of £8000 will increase your basic rate band by £10000. £10000 less of your income will be taxed at 40%. 

There is a different section on the form to enter relief at source contributions. 

On this manual form - first a box under tax reliefs. 

I've taken a look at last year's tax return which I believe I submitted correctly with pension contributions added. I was given some money back, I think this was maybe tax relief but my tax code remained unchanged. If my basic rate went up I should have got s new tax code is that right?

Sometimes but not always, depends how you answered a particular question near the end of your return.

But a tax code is only ever a method of getting provisional relief, if you file tax returns then your return establishes the actual liability and any extra relief due.

If you have been filing accurate returns, including the relief at source pension contributions, then I don't see why an overpayment relief claim is needed?

I've only submitted one correct return in the last 4 years due to my belief that i was on a net pay arrangement for my pension contribs. When i called HMRC about claiming back they told me I'd have to do it via over-payment relief.