DC pension and self assessment query

C_Mababejive

Hi all

Here is the situation.

I recently started a DC pension with my employer. I can pay upto 6% per month and they very kindly double up by adding another 12%

I also add additional contributions each month of around £400 (unmatched by employer)

My Gross pay for the year is likely to be around 53K. I also have other income streams which will take my total annual income well over the higher rate band.

I do an annual SA

I'm assuming basic rate tax relief is already allowed for via PAYE

Is there anything i need to consider here when completing my SA? (forthcoming 24-25 tax year)

Thanks all

Dazed_and_C0nfused

C_Mababejive said:

Hi all

Here is the situation.

I recently started a DC pension with my employer. I can pay upto 6% per month and they very kindly double up by adding another 12%

I also add additional contributions each month of around £400 (unmatched by employer)

My Gross pay for the year is likely to be around 53K. I also have other income streams which will take my total annual income well over the higher rate band.

I do an annual SA

I'm assuming basic rate tax relief is already allowed for via PAYE

Is there anything i need to consider here when completing my SA? (forthcoming 24-25 tax year)

Thanks all

Assumptions can lead to costly mistakes!

Being a DC pension is of no real relevance.

You need to know the method used to make the contributions before you can know if they are relevant for your Self Assessment return.

Net pay
Relief at source (25% is added to your contribution by the pension company)
Salary sacrifice (this won't be the method if you are genuinely making these contributions)

C_Mababejive

OK so here's how it currently goes,,, 

I pay 6% per month, my employer tops up with an additional 12%

This bit is via salary sacrifice

I then pay an additional amount which is outside of the salary sacrifice arrangement (not topped up) of £500 pm

At the end of the year my gross PAYE income is likely to be about £56k

Dazed_and_C0nfused

C_Mababejive said:

OK so here's how it currently goes,,, 

I pay 6% per month, my employer tops up with an additional 12%

This bit is via salary sacrifice

I then pay an additional amount which is outside of the salary sacrifice arrangement (not topped up) of £500 pm

At the end of the year my gross PAYE income is likely to be about £56k

You can't be paying 6% by salary sacrifice.  I presume you mean you are agreeing to give up 6% of your salary in return for employer contributions?

So what method is used for the £500/month?

Net pay or relief at source?  If you pay £500 and £500 ends up in your pension then that would be net pay.  Nothing can be claimed on your Self Assessment return.

If you pay £500 and £625 ends up in your pension then that would be relief at source.  Or you pay £400 and the £500 is the gross amount including basic rate relief.

It is understanding the method used that is key for tax purposes.

C_Mababejive

The additional payments are taken out before tax so it appears that the 20% TR is already being taken care of at source. 

So the next thing is, well if i am a higher rate taxpayer, how is this managed   ?? thanks

Dazed_and_C0nfused

C_Mababejive said:

The additional payments are taken out before tax so it appears that the 20% TR is already being taken care of at source. 

So the next thing is, well if i am a higher rate taxpayer, how is this managed   ?? thanks

You have already received the maximum possible relief, you cannot claim anything else.

If you don't believe me then check your liability with the gross income before the pension deductions and then with the correct taxable income 🙂