NHS pension - Tax relief on additional payments

mrkds

Dazed_and_C0nfused said:

And you receive the tax saving immediately each pay day, not months later 😀

Also, am i correct in thinking you also get relief from your national insurance contributions? since it is deducted before NI is. You cant claim NI back from a lump sum payment. 

Oppenheimer

mrkds said:

Dazed_and_C0nfused said:

And you receive the tax saving immediately each pay day, not months later 😀

Also, am i correct in thinking you also get relief from your national insurance contributions? since it is deducted before NI is. You cant claim NI back from a lump sum payment. 

No.  Tax relief only no matter which way you do the lump sum.

xylophone

Last year i made some additional payments (APs) to my NHS payments. I split it into two payments, one lump sum and one in 12 month installments taken from my salary. But i am in the dark about the tax situation. 

This comes up again and again - see thread starting here

https://forums.moneysavingexpert.com/discussion/6194603/tax-relief-for-buying-nhs-additional-pension-and-paying-lump-sum/p1

mrkds

A quick update:

I received a reply from HMRC which just says, they worked out I have paid the correct amount of tax for the 2023/24 tax year. They also say that I would have received a P800 tax calculation at the end of the tax year if I haven't paid the correct amount of tax (I've never received one of these).

I'm not very satisfied with their response. They haven't given any breakdown of my tax calculation so I have no idea if they've included the AP tax relief. If it was at the end of the tax year, HMRC would have had no knowledge about the AP at that time,  so I doubt its included in their tax calculation. I also don't see how i could have owed circa £500 in tax to balance the tax relief I should expect.  

I would appreciate any advice on how to respond.

Dazed_and_C0nfused

mrkds said:

A quick update:

I received a reply from HMRC which just says, they worked out I have paid the correct amount of tax for the 2023/24 tax year. They also say that I would have received a P800 tax calculation at the end of the tax year if I haven't paid the correct amount of tax (I've never received one of these).

I'm not very satisfied with their response. They haven't given any breakdown of my tax calculation so I have no idea if they've included the AP tax relief. If it was at the end of the tax year, HMRC would have had no knowledge about the AP at that time,  so I doubt its included in their tax calculation. I also don't see how i could have owed circa £500 in tax to balance the tax relief I should expect.  

I would appreciate any advice on how to respond.

Ignoring tax exempt amounts from ISA's how much untaxed interest did you receive in the 2023-24 tax year?

Have you done your own calculation for the year?
NB.  I don't mean £X pension contribution means a refund of £Y, I mean a full calculation.

HMRC don't issue calculations "at the end of the tax year", they are usually issued from early Summer to about now.

You can insist on a calculation if you wish but then have to pay any small amounts of tax owed (if you owe any).

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye93075

I haven't read through all the old posts in this thread again but this sounds very much like it was what you were warned would happen!

mrkds

Dazed_and_C0nfused said:

Ignoring tax exempt amounts from ISA's how much untaxed interest did you receive in the 2023-24 tax year?

Have you done your own calculation for the year?
NB.  I don't mean £X pension contribution means a refund of £Y, I mean a full calculation.

HMRC don't issue calculations "at the end of the tax year", they are usually issued from early Summer to about now.

Thanks. 

No i haven't done my own full tax calculation. Its not something i'm very keen to get my hands into, especially when that should be HMRCs job! I do have a rough idea of what tax i should pay based on salary and savings interest. Outside of ISA, probably about £1k in interest in that tax year, so i may own a small amount of tax over my allowance, but that's it as far as I can see.

You can insist on a calculation if you wish but then have to pay any small amounts of tax owed (if you owe any).

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye93075

Thanks for the link - i think insisting on a tax calculation is the best way to clarify things.

I haven't read through all the old posts in this thread again but this sounds very much like it was what you were warned would happen!

I followed the advice other posters have kindly offered on this thread. I'm not sure what other action I could have taken?

Sarahspangles

mrkds said:

A quick update:

I received a reply from HMRC which just says, they worked out I have paid the correct amount of tax for the 2023/24 tax year. They also say that I would have received a P800 tax calculation at the end of the tax year if I haven't paid the correct amount of tax (I've never received one of these).

I'm not very satisfied with their response. They haven't given any breakdown of my tax calculation so I have no idea if they've included the AP tax relief. If it was at the end of the tax year, HMRC would have had no knowledge about the AP at that time,  so I doubt its included in their tax calculation. I also don't see how i could have owed circa £500 in tax to balance the tax relief I should expect.  

I would appreciate any advice on how to respond.

Have you formally told them about the AP contributions? By letter or through your personal tax account?

Dazed_and_C0nfused

Sarahspangles said:

mrkds said:

A quick update:

I received a reply from HMRC which just says, they worked out I have paid the correct amount of tax for the 2023/24 tax year. They also say that I would have received a P800 tax calculation at the end of the tax year if I haven't paid the correct amount of tax (I've never received one of these).

I'm not very satisfied with their response. They haven't given any breakdown of my tax calculation so I have no idea if they've included the AP tax relief. If it was at the end of the tax year, HMRC would have had no knowledge about the AP at that time,  so I doubt its included in their tax calculation. I also don't see how i could have owed circa £500 in tax to balance the tax relief I should expect.  

I would appreciate any advice on how to respond.

Have you formally told them about the AP contributions? By letter or through your personal tax account?

I'm sure the op has done that, they just haven't managed to get across to HMRC that these are gross contributions where no tax relief was given under any normal method.

Chances are it will be into 2025 now before the op gets this resolved.  They just need to explain even more clearly what the type of contributions is and hope the penny drops at HMRC's end.  Which it will eventually.

The problem here is undoubtedly at HMRC's end, it is a fairly regular problem people seem to encounter.  A bit like DWP refusing to accept UC claimants can make personal RAS contributions without claimants having to jump through numerous hoops 😕

Oppenheimer

mrkds said:

A quick update:

I received a reply from HMRC which just says, they worked out I have paid the correct amount of tax for the 2023/24 tax year. They also say that I would have received a P800 tax calculation at the end of the tax year if I haven't paid the correct amount of tax (I've never received one of these).

I'm not very satisfied with their response. They haven't given any breakdown of my tax calculation so I have no idea if they've included the AP tax relief. If it was at the end of the tax year, HMRC would have had no knowledge about the AP at that time,  so I doubt its included in their tax calculation. I also don't see how i could have owed circa £500 in tax to balance the tax relief I should expect.  

I would appreciate any advice on how to respond.

Do not worry - this is all going to plan!

Phone the HMRC helpline first thing Monday morning and very politely and calmly explain what you have claimed and that you think HMRC has processed it incorrectly.

Hopefully, the call handler will know what you are talking about, and agree that tax relief has not been given, that you have provided all necessary evidence and that they leave a file note for the next colleague to processes the claim in the correct manner.

Took me about three separate phonecalls to get the HMRC call handler to leave a correct note and instructions for the next HMRC colleague - meantime, I was told I paid the correct amount of tax, I then owed HMRC money, and finally I got a tax rebate of £2,000.

When they open your file again you will not need to wait another 6/8 weeks for processing.  When they opened my file again it was processed correctly within 48 hours.  No reason why this all can't be processed and ready for you claim the tax rebate via BACS by the end of this week.  Very do-able.

Stick to your guns, you have not got the result as expected yet but are inching forward.

Keep your cool!

Good luck!

Oppenheimer

Oppenheimer said:

A couple of things to bear in mind/heads up for:

• depending on whose desk within HMRC your letter lands on, it will either be processed right or wrong - over the years I made two separate additional pension lump sums - the first time it was processed no problem, the second time it took them three attempts to process it right and I have to educate and chase them up (the following point might helps with this)
• the NHS calls it an Additional Payment (or whatever) the HMRC refers to this as Retirement Annuity Payment (this is VERY important) - if you speak to HMRC say it is a Retirement Annuity Payment which should be deducted from your taxable income.

Given you are talking about the last tax year I would expect you to get a refund within weeks.

Good luck.

Don't want to annoy fellow members on this forum but I would refer you to point 2 here - even just say I know that HMRC process it this way to get tax relief!