Pensions higher tax- Hmrc

amy2015

Can anyone help as I don’t really know anything about this… we have a company pension scheme into nest the min 5% and 3% contributions (with part of that going in straight to nest as tax relief)

we only pay pensions on the salary between the lower limit of £6k and upper limit of £50.2k. So the max cont each month I pay is 146 and my employer pays 110.

My question is do I qualify for the higher rate tax relief from Hmrc? I earnt 72k last Fy. I haven’t put any extra payments into my pension other than the basic figures above.  I thought as i am not paying pensionable amount on anything above the £50.2k then I wouldn’t be entitled to the higher tax relief . But I really don’t know. Thanks 

Dazed_and_C0nfused

You are getting confused between the amounts your employer is letting you contribute and the tax relief.

Nest operate the relief at source method so you get basic rate relief automatically and you can claim any additional relief from HMRC.

The gross contribution, inclusive of basic rate relief, increases your basic rate band, so more income is taxed at 20% and less at 40%.

To start you should check your Nest account and see what your gross contribution was in 2023-24.

Ignore any employer contributions as you don't get any tax relief on those.

Qyburn

amy2015 said:

My question is do I qualify for the higher rate tax relief from Hmrc? I earnt 72k last Fy.

Yes.      

amy2015

Yes I am definitely getting confused. Just checked last years statement (apr23-24)it said my contributions were £1,761 and tax relief was £440 is it as simple as you add these together to get the gross? 

How does the higher tax relief work on these figures? And how many years can you go back? Thanks 

molerat

Yes as simple as that and you can claim back 4 years to 20-21

Dazed_and_C0nfused

amy2015 said:

Yes I am definitely getting confused. Just checked last years statement (apr23-24)it said my contributions were £1,761 and tax relief was £440 is it as simple as you add these together to get the gross? 

How does the higher tax relief work on these figures? And how many years can you go back? Thanks 

Yes.  The tax relief should always be 25% of your net contribution.  And when added together the tax relief is 20% of the gross amount.

You can go back to the 2020-21 tax year but must notify HMRC by no later than 5 April 2025 for 2020-21.

Any refund due for the previous tax years will come back to you as a refund and then HMRC will allow provisional relief for the current tax year via your tax code.

You should let HMRC have estimates of your gross contribution and expected earnings (P60 pay figure) for the current tax year so your tax code is accurate as possible.

You might also want to consider making additional contributions (opening a SIPP or personal pension if necessary) as your current contributions seem low for the salary and it's a very tax efficient way of saving for your future.

If you are entitled to higher rate relief on the whole contribution you get £5,000 into your pension for a real cost of just £3,000.

amy2015

Wow really, feels like free money. So based on my figures would that be roughly £440 per year extra that I was due? Do I just call up Hmrc and ask? I do fill out a self assessment tax return (for child benefit) but I didn’t even realise I could do this so I have obviously never filled that bit in! 

Dazed_and_C0nfused

amy2015 said:

Wow really, feels like free money. So based on my figures would that be roughly £440 per year extra that I was due? Do I just call up Hmrc and ask? I do fill out a self assessment tax return (for child benefit) but I didn’t even realise I could do this so I have obviously never filled that bit in! 

Ignore what I said about a simple refund then, that completely changes things 😥

You still get a refund but it's more complicated.

As you have filed incorrect returns then you need to do up to 3 different things.

1.  Complete your 2023-24 return correctly (or amend it if already filed)
2.  Amend your 2022-23 return (you have until 31 January 2025 to do this)
3.  Submit a claim for overpayment relief for 2020-21 and 2021-22.  You need to follow the guidance at the here (from If you've missed the deadline to change your return)

https://www.gov.uk/self-assessment-tax-returns/corrections

Qyburn

amy2015 said:

Wow really, feels like free money. So based on my figures would that be roughly £440 per year extra that I was due? Do I just call up Hmrc and ask? I do fill out a self assessment tax return (for child benefit) but I didn’t even realise I could do this so I have obviously never filled that bit in! 

When you did your tax return did you not fill in the section about pension contributions? I didn’t file a return for 23/24 but previous year's it was the first question under "Tax reliefs" ..

 "Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (called ‘relief at source’). Enter the payments and basic rate tax"

amy2015

Dazed_and_C0nfused said:

amy2015 said:

Wow really, feels like free money. So based on my figures would that be roughly £440 per year extra that I was due? Do I just call up Hmrc and ask? I do fill out a self assessment tax return (for child benefit) but I didn’t even realise I could do this so I have obviously never filled that bit in! 

Ignore what I said about a simple refund then, that completely changes things 😥

You still get a refund but it's more complicated.

As you have filed incorrect returns then you need to do up to 3 different things.

1.  Complete your 2023-24 return correctly (or amend it if already filed)
2.  Amend your 2022-23 return (you have until 31 January 2025 to do this)
3.  Submit a claim for overpayment relief for 2020-21 and 2021-22.  You need to follow the guidance at the here (from If you've missed the deadline to change your return)

https://www.gov.uk/self-assessment-tax-returns/corrections

Should have known I would have complicated things 🤣 I will get on to that tomorrow as every little helps thank you

Dazed_and_C0nfused

amy2015 said:

Dazed_and_C0nfused said:

amy2015 said:

Wow really, feels like free money. So based on my figures would that be roughly £440 per year extra that I was due? Do I just call up Hmrc and ask? I do fill out a self assessment tax return (for child benefit) but I didn’t even realise I could do this so I have obviously never filled that bit in! 

Ignore what I said about a simple refund then, that completely changes things 😥

You still get a refund but it's more complicated.

As you have filed incorrect returns then you need to do up to 3 different things.

1.  Complete your 2023-24 return correctly (or amend it if already filed)
2.  Amend your 2022-23 return (you have until 31 January 2025 to do this)
3.  Submit a claim for overpayment relief for 2020-21 and 2021-22.  You need to follow the guidance at the here (from If you've missed the deadline to change your return)

https://www.gov.uk/self-assessment-tax-returns/corrections

Should have known I would have complicated things 🤣 I will get on to that tomorrow as every little helps thank you

Depending on the specific amounts involved each year it could be more than £440 you gave as an example as the gross contribution also reduces your adjusted net income.

And HICBC is based on adjusted net income.