Pension RAS tax relief reclaim via self-assessment (20/40/45% band)

Thorndorise

Hi all,

I think I understand tax, then something comes along that utterly stumps me, I go away and read the helpful HMRC advice and realise I'm now more confused....so over to you...

So I paid Salary sacrifice pension contributions of £27,022.50 (background, but I guess relevant if I get near a threshold)

Then I made AVCs (post-tax and into my same workplace pension as the sal sacrifice above) from my net pay (monthly)....which had relief at source providing the 20% basic rate. This was a total of £7,226.95, and an the RAS making it up to £9,033.69.

When I've filled in my self-assessment I've put (as advised) the total payments (including the 20% RAS) of £9,033.69 in

Personal pensions and retirement annuities,

under

"Payments to registered pension schemes (also known as PPR) where basic rate tax relief will be claimed by your pension provider (called 'relief at source')." Enter the payments and basic rate tax:

So my question is this, given I do a self-assessment - how am I 'claiming the tax relief' back on this amount as a 45% Tax payer - Does it go into my Tax code (I never choose this personally), should it be an actual refund? - how do they know I've paid that amount out - do they contact me to ask for a pension statement...?

Thanks in advance...

[Deleted User]

It’s an actual refund and it will be paid through self-assessment. 

If HMRC want evidence they will soon let you know!

They may adjust your tax code for the current year in anticipation of you making the same contributions this year - keep an eye out if this proves to be inaccurate! 

You seem to be fairly clued up with your actions appropriate. 

Dazed_and_C0nfused

Thorndorise said:

Hi all,

I think I understand tax, then something comes along that utterly stumps me, I go away and read the helpful HMRC advice and realise I'm now more confused....so over to you...

So I paid Salary sacrifice pension contributions of £27,022.50 (background, but I guess relevant if I get near a threshold)

Then I made AVCs (post-tax and into my same workplace pension as the sal sacrifice above) from my net pay (monthly)....which had relief at source providing the 20% basic rate. This was a total of £7,226.95, and an the RAS making it up to £9,033.69.

When I've filled in my self-assessment I've put (as advised) the total payments (including the 20% RAS) of £9,033.69 in

Personal pensions and retirement annuities,

under

"Payments to registered pension schemes (also known as PPR) where basic rate tax relief will be claimed by your pension provider (called 'relief at source')." Enter the payments and basic rate tax:

So my question is this, given I do a self-assessment - how am I 'claiming the tax relief' back on this amount as a 45% Tax payer - Does it go into my Tax code (I never choose this personally), should it be an actual refund? - how do they know I've paid that amount out - do they contact me to ask for a pension statement...?

Thanks in advance...

Salary sacrifice means you didn't pay anything into the pension.  You agreed to a reduced salary in return for employer contributions being paid into your pension.  No pension tax relief is due on employer contributions.

 With the RAS contributions you aren't really "claiming" anything.  You are completing the return accurately so that you receive the relevant tax relief.

Have you tried checking your Self Assessment calculation without the RAS contributions, noting the final figure at the end of the calculation.  Say £350 tax owed.

Then add in the RAS contributions and check the calculation again noting the same end figure.  The difference between the two is the tax saving you have obtained.

HMRC never ever give pension tax relief for one tax year via the tax code of a different tax year.

It is called Self Assessment for a reason.  If HMRC decide to investigate your return they will write to you saying what information they need you to provide.

Thorndorise

[Deleted User] said:

It’s an actual refund and it will be paid through self-assessment. 

If HMRC want evidence they will soon let you know!

They may adjust your tax code for the current year in anticipation of you making the same contributions this year - keep an eye out if this proves to be inaccurate! 

You seem to be fairly clued up with your actions appropriate. 

Yeah see, that's what I thought - I make the higher and additional tax relief a further £2,258.42 - but having entered the above numbers for the total + basic rate, my rebate is about £470, and this seems mainly down to an overpayment rather than any relief on the tax - what am I missing?

Also it will go up this tax year as I really need to be planning better for looking after my kids and my old age!! so have upped my AVC a bit too...

Thorndorise

Dazed_and_C0nfused said:

Thorndorise said:

Hi all,

I think I understand tax, then something comes along that utterly stumps me, I go away and read the helpful HMRC advice and realise I'm now more confused....so over to you...

So I paid Salary sacrifice pension contributions of £27,022.50 (background, but I guess relevant if I get near a threshold)

Then I made AVCs (post-tax and into my same workplace pension as the sal sacrifice above) from my net pay (monthly)....which had relief at source providing the 20% basic rate. This was a total of £7,226.95, and an the RAS making it up to £9,033.69.

When I've filled in my self-assessment I've put (as advised) the total payments (including the 20% RAS) of £9,033.69 in

Personal pensions and retirement annuities,

under

"Payments to registered pension schemes (also known as PPR) where basic rate tax relief will be claimed by your pension provider (called 'relief at source')." Enter the payments and basic rate tax:

So my question is this, given I do a self-assessment - how am I 'claiming the tax relief' back on this amount as a 45% Tax payer - Does it go into my Tax code (I never choose this personally), should it be an actual refund? - how do they know I've paid that amount out - do they contact me to ask for a pension statement...?

Thanks in advance...

Salary sacrifice means you didn't pay anything into the pension.  You agreed to a reduced salary in return for employer contributions being paid into your pension.  No pension tax relief is due on employer contributions.

 With the RAS contributions you aren't really "claiming" anything.  You are completing the return accurately so that you receive the relevant tax relief.

Have you tried checking your Self Assessment calculation without the RAS contributions, noting the final figure at the end of the calculation.  Say £350 tax owed.

Then add in the RAS contributions and check the calculation again noting the same end figure.  The difference between the two is the tax saving you have obtained.

HMRC never ever give pension tax relief for one tax year via the tax code of a different tax year.

It is called Self Assessment for a reason.  If HMRC decide to investigate your return they will write to you saying what information they need you to provide.

Thank you and yes, sorry I realise I'm not paying the sal sacrifice (clues in the name right) and yep, got there is no relief there.

And agreed, I realise that I'm not claiming anything per se - rather as you sat accurately reflecting I did pay into my pension.

Right, I hadn't thought of doing that simple step of just removing the pension payments to see what it looked like, lo and behold £2258.50

Think that'll do, thank you @Dazed_and_C0nfused  & @[Deleted User] 

Thorndorise

@Dazed_and_C0nfused
I wanted to pick your brain (or indeed others on this) and have a separate question on the child benefit page (for Child maintenance).

Maybe be another stupid one but here goes. I an able to deduct pension payments from my gross income that the CMS get from the HMRC, this obviously excludes Sal Sac's as they've already come off, but for those AVCs I make with RAS, I initially had my annual payments plus the 20% RAS

I noted as a higher/addl rate tax payer I can also inform the CMS of the higher rate tax relief, and they agreed that they cold deduct it - however after sending my pension statement with my payments & RAS 20% on, with my HMRC calculation (showing the same number) they could only apply the number shown there, not the higher/addl.

As you helpfully stated, if I enter 0 for pensions and then the correct figure, then the difference shows the ' pension tax relief'. But, as this is worked out by increasing the basic rate of tax band, and HMRC don't provide any other calculation (I spoke with technical on this), then CMS won't accept that as evidence.

Let's assume I was owed £400 tax with my 'gross' pension payments on my return, and I owed HMRC for tax of £800 if I take my pension payments off the return, the difference for examples sake is £1200, this is the 'relief'....but as I don't get that back due to owing them money, I only get the £400 refund - how do I show the CMS that the total figure was my higher/addl pension tax relief.

PS they (CMS) asked me to ask the pension provider to supply a full statement, but RL in this case (workplace group pension) replied they only capture the basic RAS. So I haven't' got anything to show the CMS at all!