Tax rebate on pension contributions - employer's contributions?

olip74

I'd like to confirm my understanding before I approach HMRC about my tax rebate.

I live in Scotland and my income is into the 42% tax bracket.

I sacrificed my bonus to my pension this year and, due to the NI savings for my employer, they contribute an extra 10%.

The pension fund will automatically claim 20% on my behalf. I can then claim a rebate from HMRC for the remaining 22%.

So far so good (I think) but can I claim a rebate for the extra 10% which my employer has contributed? It doesn't show up on my pay slip so I'm unclear if it counts as income?

Dazed_and_C0nfused

olip74 said:

I'd like to confirm my understanding before I approach HMRC about my tax rebate.

I live in Scotland and my income is into the 42% tax bracket.

I sacrificed my bonus to my pension this year and, due to the NI savings for my employer, they contribute an extra 10%.

The pension fund will automatically claim 20% on my behalf. I can then claim a rebate from HMRC for the remaining 22%.

So far so good (I think) but can I claim a rebate for the extra 10% which my employer has contributed? It doesn't show up on my pay slip so I'm unclear if it counts as income?

You cannot get any pension tax relief whatsoever on employer contributions.

If the pension fund is claiming basic rate relief something has gone seriously wrong.

You benefit from having less income to pay tax and NI on in the first place.  There is nothing else due to you.

Linton

Sacrificing your bonus gives you a higher employer contribution.  Employer pension contributions are not income. Your tax benefit from Salary Sacrifice is that you dont pay tax on the money since you never receive it. You cant claim anything extra since there is no tax to rebate. 

The 20% government payment into pensions only applies to personal contributions so if your normal pension is from salary sacrifice there is no 20% extra claimed by the pension fund..

dunstonh

The pension fund will automatically claim 20% on my behalf. I can then claim a rebate from HMRC for the remaining 22%.

This would suggest that you have not sacrificed the bonus for a pension contribution. 
Instead, you have chosen to make a pension contribution using the bonus as the source of funds.

That may sound similar and just a change of words but it actually changes the tax position.  Sacrificing means the employer reduces the amount of your salary/bonus and makes an employer contribution to your pension.  You pay less tax and NI via the payslip.  So, no tax relief is handled via the pension provider.

If the pension provider is applying tax relief, then you are not using sacrifice.

So far so good (I think) but can I claim a rebate for the extra 10% which my employer has contributed? It doesn't show up on my pay slip so I'm unclear if it counts as income?

You don't get the tax relief on employer contributions.   The employer gets it as its a business expense for them.

olip74

Correct guys, sorry I'm being daft. I had a change of employment last year and I used some of my redundancy payment to start a SIPP. It was the first time I'd been able to claim a rebate so I assumed I'd be able to do that again this year. My new employer operates a net pay scheme so, as most of you have pointed out, I've already had my tax relief!

Doh!