Claiming additional tax relief

Jami74

I have unexpectedly breached the basic tax rate (by a couple of hundred pounds) for the 2023/2024 tax year due to earning just over £1200 interest on savings. I knew I would have to pay tax on the amount over £1000 but because it put my income for the year above £50,271 my personal savings allowance is only £500. 

I know it has been explained over and over again to me and on these forums but I do get in a muddle with numbers and didn't expect my salary to go above £50,000 so please don't be mean.

I have been making small contributions to my SIPP and I know there's a way to claim additional tax relief on it. Do the SIPP contributions need to be the same tax year? Can I only claim the contributions made in the 2023/2024 tax year, or can I include some from this tax year too?

Sorry if it's a daft question, and thanks in advance.

Dazed_and_C0nfused

Jami74 said:

I have unexpectedly breached the basic tax rate (by a couple of hundred pounds) for the 2023/2024 tax year due to earning just over £1200 interest on savings. I knew I would have to pay tax on the amount over £1000 but because it put my income for the year above £50,271 my personal savings allowance is only £500. 

I know it has been explained over and over again to me and on these forums but I do get in a muddle with numbers and didn't expect my salary to go above £50,000 so please don't be mean.

I have been making small contributions to my SIPP and I know there's a way to claim additional tax relief on it. Do the SIPP contributions need to be the same tax year? Can I only claim the contributions made in the 2023/2024 tax year, or can I include some from this tax year too?

Sorry if it's a daft question, and thanks in advance.

Only contributions paid in 2023-24 are relevant for that tax year.  When the basic rate tax relief was added doesn't count, it's always your contribution + the 25% the pension company adds.

Contribution made in 2024-25 are irrelevant for the 2023-24 tax year.

If HMRC are unaware of these contributions, from the perspective of your personal tax position, then you can ask for them to be taken into account.

The gross amount increases your basic rate band meaning more income can be taxed at 20% and less at 40%.  It might also mean you have £1,000 interest taxed at 0% rather than just £500.

When providing this information at this time of year it also probably sensible to also tell them what you expect to pay into the SIPP in the current tax year and also next year (appreciate this can only be a best estimate).  They can then give relief provisionally in your tax code for the current and next tax year.

Nomunnofun1

Jami74 said:

I have unexpectedly breached the basic tax rate (by a couple of hundred pounds) for the 2023/2024 tax year due to earning just over £1200 interest on savings. I knew I would have to pay tax on the amount over £1000 but because it put my income for the year above £50,271 my personal savings allowance is only £500. 

I know it has been explained over and over again to me and on these forums but I do get in a muddle with numbers and didn't expect my salary to go above £50,000 so please don't be mean.

I have been making small contributions to my SIPP and I know there's a way to claim additional tax relief on it. Do the SIPP contributions need to be the same tax year? Can I only claim the contributions made in the 2023/2024 tax year, or can I include some from this tax year too?

Sorry if it's a daft question, and thanks in advance.

Not a daft question at all. 

It’s too late to do anything for 2023/24 with respect to SIPP payments - cannot be carried back. 

You could, however, make Gift Aid payments now and carry back to 2023/24 but NOT after you have submitted the return for that year. 

For example - if you have exceeded the higher rate threshold by £500 in 2023/34 you could make gift aid payments of £400 and carry back. 

Sarahspangles

You can’t carry back SIPP contributions you made in this financial year, but did you also contribute to the SIPP in 2023/24, and do HMRC know this? 

Jami74

Thank-you all. No SIPP payments for 23/24 so that year is what it is. I have made SIPP payments this year though and reduced my taxable interest. And I'll keep a tally/receipts of my charity donations going forward.

Dazed_and_C0nfused

Jami74 said:

Thank-you all. No SIPP payments for 23/24 so that year is what it is. I have made SIPP payments this year though and reduced my taxable interest. And I'll keep a tally/receipts of my charity donations going forward.

That isn't what you're original post seemed to be saying,


I have been making small contributions to my SIPP and I know there's a way to claim additional tax relief on it. Do the SIPP contributions need to be the same tax year? Can I only claim the contributions made in the 2023/2024 tax year, or can I include some from this tax year too?

Jami74

Dazed_and_C0nfused said:

That isn't what you're original post seemed to be saying,

I've checked back and last one in 2023 was March, so that won't count. Then due to buying a house all available money was kept in easy access accounts (have a work DB pension) and first contributions in 2024 were after April. So no relevant SIPP contributions in that tax year. Now I have a mortgage so directing available money between overpayments and SIPP again.

Dazed_and_C0nfused

Jami74 said:

Dazed_and_C0nfused said:

That isn't what you're original post seemed to be saying,

I've checked back and last one in 2023 was March, so that won't count. Then due to buying a house all available money was kept in easy access accounts (have a work DB pension) and first contributions in 2024 were after April. So no relevant SIPP contributions in that tax year. Now I have a mortgage so directing available money between overpayments and SIPP again.

In that case 2023-24 is what it is and there's nothing you can do now to change that from a pension contribution perspective.

Jami74

This tax year 2024/2025 I estimate my taxable pay and savings interest (aiming for just under £1000) will total about £55,420.
I think this means I will pay 40% tax on £5,150, so £2,060. 
If I put £5,150 into my SIPP by end of March, then I can inform HMRC and they will adjust my tax code in my favour by £1,030? 

Dazed_and_C0nfused

Jami74 said:

This tax year 2024/2025 I estimate my taxable pay and savings interest (aiming for just under £1000) will total about £55,420.
I think this means I will pay 40% tax on £5,150, so £2,060. 
If I put £5,150 into my SIPP by end of March, then I can inform HMRC and they will adjust my tax code in my favour by £1,030? 

That isn't how things work.

The amount of 40% tax you will pay will depend on the mix of income (earnings and interests assuming they are the only two things to consider).

The amount of higher rate relief also depends on how much higher rate tax you avoid paying.

And you are never going to get that back via a tax code adjustment.  You need to provide HMRC with the details and then later this summer when they review your overall tax position for 2024-25 they will send you a calculation of any tax overpaid and you can transfer the refund into your bank account.

HMRC never give higher rate pension tax relief for one tax year via a tax code adjustment for a different tax year.

Jami74

Dazed_and_C0nfused said:

And you are never going to get that back via a tax code adjustment.  You need to provide HMRC with the details and then later this summer when they review your overall tax position for 2024-25 they will send you a calculation of any tax overpaid and you can transfer the refund into your bank account.

Oh a refund is even better! Thank-you so much for being so patient with me about this.

Earnings and interest are the only two things to consider. So as I understand it, the aim is to keep taxable earnings below £50,270 (by adding taxable earnings over this into my SIPP). And once I've told them I have added money to the SIPP they'll calculate a refund taking into account the savings interest too.

(I am aware that 80%, or even 60% of something is better than 100% of nothing but I am quite close to the thresholds and as I've spent the last few years getting great pleasure in saving a few extra pounds here and there in interest, cashback, surveys etc it makes sense to continue in the same vain with saving a few on my income if I can.)