Adding to old workplace pension from savings and claiming tax relief

Dazed_and_C0nfused

Bookle said:

Good to know via self assesment is an option.
Would much rather avoid that route as the one time I had to do it the past it was major pain in the butt.

If I can do it via the (I believe, new for this year) pension tax relief claim form, I will try that first.
If I absolutely have to via SA, I will.

Expect it to take a long time to be sorted and don't mention salary sacrifice contribution as you didn't pay them.

They are employer contributions made because you agreed to sacrifice part of your salary and you are not entitled to any tax relief on employer contributions.

Albermarle

Bookle said:

Good to know via self assesment is an option.
Would much rather avoid that route as the one time I had to do it the past it was major pain in the butt.

If I can do it via the (I believe, new for this year) pension tax relief claim form, I will try that first.
If I absolutely have to via SA, I will.

I was taken off SA and was never happy about it.
The online SA form was easy to fill in and you could immediately see your tax calculation.

QrizB

DRS1 said:

You may be better opening a new personal pension which will reclaim the 20% for you.  I believe contributions made by the employee where the scheme has not reclaimed the 20% can be confusing for HMRC

If OP really wants it all in one place, they could open a low-cost personal pension, make the contributions, wait for the RAS tax relief then transfer into their existing (ex-)workplace scheme.

Bookle

Thanks everyone for expertise and advice - much appreciated.
I've now got the payment setup for existing DC pension and so will go that route.
I'll report back on how the tax relief claim via their form goes with HMRC - fingers crossed!

Bookle

Reporting back...it's not been fun (I know, I know - you warned me)

So I claimed tax relief on my additional personal payment from savings into my old company DC scheme via HMRC form (not self assessment) designed for this purpose when tax relief is not automatically applied at either lower or higher rate.

* First claim - flat out rejected, still don't know why and neither did HMRC advisor I spent 30mins with - 'looks ok to me' they said, try it again with extra info...another 28 days later...

* 2nd Claim - Looks they have now accepted the claim and have very slightly tweaked my tax code.
I only knew because got message saying tax code had changed!

I didn't get any letter, email or any explanation or outline of the outcome, what happens next and by when.
When I log in via gov gateway it just says the claim is 'complete'

So what's next....??

I naively expected HMRC to pay the 20% basic relief into my pension scheme and then the higher rate relief would be paid more gradually via adjusted tax code.

* No basic rate relief and no indication of whether/when either.

* Tax code adjustment = only around 12% of what I calculated for higher rate relief via usual online calculators. Assuming they pay it all within same tax year?

I know my next step is to call HMRC (the joys!)
But any other experiences out there on what to expect and by when?
Is my experience typical? Anything I'm doing wrong?
Will I just end up claiming via self assesment?

hugheskevi

I naively expected HMRC to pay the 20% basic relief into my pension scheme and then the higher rate relief would be paid more gradually via adjusted tax code.

HMRC will not put anything into the pension, it will all be paid as a tax refund.

I know my next step is to call HMRC (the joys!)

You may well find it easier to call several times until you get to speak with someone who knows what they are talking about, rather than trying to convince someone who doesn't have a clue and just keeps trying to explain relief-at-source to you.

Is my experience typical? Anything I'm doing wrong?

Very typical - so typical, you were even cautioned before embarking that HMRC would mess it up. They have a very strong track record in this area.

Will I just end up claiming via self assesment?

You will eventually get there without needing to resort to self-assessment if you are persistent. It will take a lot of time and frustration, but eventually you will get to engage with someone at HMRC who knows what they are doing and as soon as that happens everything will be sorted very quickly.

Bookle

Thanks @hugheskevi.

On basic rate tax relief payment - how do I even know that's in progress?
(I going to assume it's not made it over the start line and it's only the higher rate relief that's been processed (ref small tax code change))

Do you get a cheque from HMRC that you add yourself to your pension?
How do they ensure you do add the basic tax relief to your pension plan rather than just pocketing it?

The whole process is incredibly ambiguous with no literature anywhere that I can see other than the basic - 'you can claim via HMRC'
Nothing that describes step by step process, how payments are made, timeline v tax year, when best to claim etc.
Anyone have any links with more detail or even experiences?

Thanks again.

Dazed_and_C0nfused

Bookle said:

Thanks @hugheskevi.

On basic rate tax relief payment - how do I even know that's in progress?
(I going to assume it's not made it over the start line and it's only the higher rate relief that's been processed (ref small tax code change))

Do you get a cheque from HMRC that you add yourself to your pension?
How do they ensure you do add the basic tax relief to your pension plan rather than just pocketing it?

The whole process is incredibly ambiguous with no literature anywhere that I can see other than the basic - 'you can claim via HMRC'
Nothing that describes step by step process, how payments are made, timeline v tax year, when best to claim etc.
Anyone have any links with more detail or even experiences?

Thanks again.

You have misunderstood a few things about how this works.

Nothing extra is ever going to be added to your pension fund in respect of this contribution. If you wanted that to happen you really should have made sure you were making a "relief at source" contribution, not a gross one with no relief at the point you paid it.

All the tax relief will come back to you, either as a tax code adjustment (more take home pay) or a payment direct from HMRC (cheque or bank transfer).

You may choose to make an extra pension contribution using that refund but that would be a brand new pension contribution, you wouldn't be adding the basic rate relief to your pension as you cannot do that.  And if you do that using the same gross contribution process then you will be starting this whole rigmarole off again.  Relief at source definitely seems the better option in future.

hugheskevi

On basic rate tax relief payment - how do I even know that's in progress?
(I going to assume it's not made it over the start line and it's only the higher rate relief that's been processed (ref small tax code change))

It is not a 2-stage process, it is a single process to give a tax refund. There is a single calculation covering all relief due.

Do you get a cheque from HMRC that you add yourself to your pension?

If the refund relates to the current tax year it is usually done as a Tax Code adjustment. If it relates to past years you receive a bank transfer.

How do they ensure you do add the basic tax relief to your pension plan rather than just pocketing it?

There is no requirement or expectation that you add any of the refund to the pension. In fact, it is better that you don't, as that then requires another round of tax relief claim so it would have been better to put everything you want to contribute to the pension into the first contribution.

Think of it like this. You are a higher rate taxpayer and want £10,000 (gross) to go into the pension. Under relief-at-source you contribute £8,000 and have £2,000 of basic rate relief automatically added by the provider. You then claim £2,000 refund from HMRC so the end position is that you have £10,000 in the pension at a net cost to you of £6,000. Whereas when there is no relief-at-source you send £10,000 to the provider, and HMRC refund you £4,000. So you end up in the same position.

Anyone have any links with more detail or even experiences?

There are many old threads on here about people who purchased Added Pension by lump sum contribution in public service pension schemes. In those cases individuals do not get any automatic tax relief and have to reclaim it all from HMRC as you are doing. Search and read through those threads. This thread is a bit old, but nothing has changed and it is comprehensive.

Bookle

Thanks again for all the expertise.

I'm 100% fine with any/all tax relief coming direct to me - as long as it does!
I was just surprised to have that freedom given the reasons you get the tax relief for to start with!

I'll write to HMRC with all the details as outlined in the linked thread and then follow up with phone calls (v. likely multiple!)
Failing that. will be SA.

Overall the communication (or lack of) on what HMRC decided, why, how much I'm entitled to and what's next is so very disappointing.
I've literally received nothing other than, 'your tax code has changed' - which I guess is a start.

Will report back just in case anyone might find the information/experience valuable.
Thanks again everyone.