40 percent tax/pension/rebate question

superjuz

Good afternoon all, 

Having just received my wage slip for the month, it's looking more likely I'll get dragged into the 40 percent tax bracket. My tax code is 1265L

My total earnings for this tax year so far are £13,000 - so pro-rata £52K. 

My post tax pension contribution is £167.10/month but £208 appears on my pension statement so I guess I'm taxed at source. (not sure how the numbers work on that). 

The questions I have are;

If I don't end up hitting the 40 percent tax threshold, how and when will the money I've paid at that rate so far be returned to me?

Do I need to do a self assessment to get the extra 20 percent tax relief on my pension contributions? Will that be added to my pot?  

Thanks for taking the time to read

 

Sarahspangles

superjuz said:

My post tax pension contribution is £167.10/month but £208 appears on my pension statement so I guess I'm taxed at source. (not sure how the numbers work on that). 

The questions I have are;

If I don't end up hitting the 40 percent tax threshold, how and when will the money I've paid at that rate so far be returned to me?

Do I need to do a self assessment to get the extra 20 percent tax relief on my pension contributions? Will that be added to my pot?  

 

Your figures suggest you receive Relief at Source with your 80% plus 20% from HMRC paid into your pension (it’s a confusing term, but very common)

You can monitor how close you are to the higher rate tax band by looking at your taxable pay figure on your payslip, particularly YTD (year to date).

So long as your tax code is cumulative, any higher rate tax paid in one month, that isn’t due taking into account your annual income, will ‘sort itself out’ by the end of the tax year. Your PAYE payment process looks at the year to date taxable and tax paid. Cumulative codes don’t have an X or Month1 after the number.

If you do pay some 40% tax then there is an online process to reclaim it via your personal tax account online. The money is repaid to you rather than into your pot, though obviously if you have the option you can then contribute that too.

superjuz

That’s great, thank you for taking the time to reply, it is very much appreciated! 🙏