Do I need to declare and overall money review

Scottyboy_5627

So I am currently in a position where I am/was around £5,000+ in credit card debt, with a £10,000+ loan for a car and have been offered to have the years worth of pension contributions paid back to me after I left.

My main goal is to reduce the amount of debt I have in total, to reduce/remove the amount of interest I am paying so I can finally start putting money into my savings. My loan which was applied for to pay off a PCP agreement and already incudes the interest I need to pay back.

I had a credit card which had an amount on there which is interest free and the rest was not. So I was paying interest on that part.

I had roughly £1000 in savings, sitting there earning little to no interest. Obviously, the interest on the credit card meant I was still owing more than I was earning in savings.

On top of that, my last employer offered to have my pension contributions paid back to me. This totalled just over £1600. That was also after they deducted 20%. But it would appear I earned interest on it (which the 20% deductions took into account from looking at the letter).

That plus what I had in savings was used to take a massive chunk out of my credit card, therefore, putting me into the interest free part. But obviously, I plan to have the remainder paid off before focusing onto savings again and to clear it before the interest free period ends.

The confusion lays with the pension contributions that were paid back to me. It was a Local government pension scheme. The letter did state that I MAY have to declare that payment to me to HMRC titled TAX ON INTEREST FOR LATE PAYMENT. I wasn't sure if this meant whether the interest earned on it took me into the next tax band I would need to declare it. From my calculations, I would be nowhere near entering the next tax band (of 40%) so shouldn't have to declare it? But I also might be getting it really wrong on the reasons as to why I would have to declare it.

Additionally. My plan is to pay off the remainder of the credit card debt I have before going back to contribute to savings, just so that it is call cleared. it's just whether this is a smart thing to do or not (it would be paid off approximately before February 2025, I have a spread sheet)?

After that point, my plan was to build back up my emergency savings pot. Then look to put savings into other areas (LISA as well as spreading it across other savings and funds (Premium bonds, investments including a very small amount in crypto)), while also chipping In a bit more every month into the loan, onto of the agreed monthly payments (once the emergency fund is back to what it should be).

The main crux of this post Is whether or not I need to declare that £1600. But a critique of my further savings/debt payment plan is viable and good.

Dazed_and_C0nfused

Scottyboy_5627 said:

So I am currently in a position where I am/was around £5,000+ in credit card debt, with a £10,000+ loan for a car and have been offered to have the years worth of pension contributions paid back to me after I left.

My main goal is to reduce the amount of debt I have in total, to reduce/remove the amount of interest I am paying so I can finally start putting money into my savings. My loan which was applied for to pay off a PCP agreement and already incudes the interest I need to pay back.

I had a credit card which had an amount on there which is interest free and the rest was not. So I was paying interest on that part.

I had roughly £1000 in savings, sitting there earning little to no interest. Obviously, the interest on the credit card meant I was still owing more than I was earning in savings.

On top of that, my last employer offered to have my pension contributions paid back to me. This totalled just over £1600. That was also after they deducted 20%. But it would appear I earned interest on it (which the 20% deductions took into account from looking at the letter).

That plus what I had in savings was used to take a massive chunk out of my credit card, therefore, putting me into the interest free part. But obviously, I plan to have the remainder paid off before focusing onto savings again and to clear it before the interest free period ends.

The confusion lays with the pension contributions that were paid back to me. It was a Local government pension scheme. The letter did state that I MAY have to declare that payment to me to HMRC titled TAX ON INTEREST FOR LATE PAYMENT. I wasn't sure if this meant whether the interest earned on it took me into the next tax band I would need to declare it. From my calculations, I would be nowhere near entering the next tax band (of 40%) so shouldn't have to declare it? But I also might be getting it really wrong on the reasons as to why I would have to declare it.

Additionally. My plan is to pay off the remainder of the credit card debt I have before going back to contribute to savings, just so that it is call cleared. it's just whether this is a smart thing to do or not (it would be paid off approximately before February 2025, I have a spread sheet)?

After that point, my plan was to build back up my emergency savings pot. Then look to put savings into other areas (LISA as well as spreading it across other savings and funds (Premium bonds, investments including a very small amount in crypto)), while also chipping In a bit more every month into the loan, onto of the agreed monthly payments (once the emergency fund is back to what it should be).

The main crux of this post Is whether or not I need to declare that £1600. But a critique of my further savings/debt payment plan is viable and good.

Why would you need to declare the £1,600?

Or was that the interest you received?  Your post seems to suggest it was predominantly the refund of your contributions (after tax).

You seem very calm about the employer contributions you have lost.  Did you really not consider a transfer was the better long term option?

Scottyboy_5627

Dazed_and_C0nfused said:

Scottyboy_5627 said:

So I am currently in a position where I am/was around £5,000+ in credit card debt, with a £10,000+ loan for a car and have been offered to have the years worth of pension contributions paid back to me after I left.

My main goal is to reduce the amount of debt I have in total, to reduce/remove the amount of interest I am paying so I can finally start putting money into my savings. My loan which was applied for to pay off a PCP agreement and already incudes the interest I need to pay back.

I had a credit card which had an amount on there which is interest free and the rest was not. So I was paying interest on that part.

I had roughly £1000 in savings, sitting there earning little to no interest. Obviously, the interest on the credit card meant I was still owing more than I was earning in savings.

On top of that, my last employer offered to have my pension contributions paid back to me. This totalled just over £1600. That was also after they deducted 20%. But it would appear I earned interest on it (which the 20% deductions took into account from looking at the letter).

That plus what I had in savings was used to take a massive chunk out of my credit card, therefore, putting me into the interest free part. But obviously, I plan to have the remainder paid off before focusing onto savings again and to clear it before the interest free period ends.

The confusion lays with the pension contributions that were paid back to me. It was a Local government pension scheme. The letter did state that I MAY have to declare that payment to me to HMRC titled TAX ON INTEREST FOR LATE PAYMENT. I wasn't sure if this meant whether the interest earned on it took me into the next tax band I would need to declare it. From my calculations, I would be nowhere near entering the next tax band (of 40%) so shouldn't have to declare it? But I also might be getting it really wrong on the reasons as to why I would have to declare it.

Additionally. My plan is to pay off the remainder of the credit card debt I have before going back to contribute to savings, just so that it is call cleared. it's just whether this is a smart thing to do or not (it would be paid off approximately before February 2025, I have a spread sheet)?

After that point, my plan was to build back up my emergency savings pot. Then look to put savings into other areas (LISA as well as spreading it across other savings and funds (Premium bonds, investments including a very small amount in crypto)), while also chipping In a bit more every month into the loan, onto of the agreed monthly payments (once the emergency fund is back to what it should be).

The main crux of this post Is whether or not I need to declare that £1600. But a critique of my further savings/debt payment plan is viable and good.

Why would you need to declare the £1,600?

Or was that the interest you received?  Your post seems to suggest it was predominantly the refund of your contributions (after tax).

You seem very calm about the employer contributions you have lost.  Did you really not consider a transfer was the better long term option?

I'll break down the amounts including totals and deductions:

Total Contributions: £1758.22

Less Certified Amount: £0
Less Tax at 20%: £351.66
Interest for late payment: £273.77
Refund payable: £1680.43

It's my lack of knowledge around pensions and whether any of it needs to be declared for having it paid to me (I was 29 after I left working there for 1 year and they gave me the option to have that year of contributions paid).

Regarding whether I considered transferring the amount = Yes very much so. Again, it may have been my short term thinking over ruling the long term. I'm now 32 turning 33, having had to move back home with little to no savings. I'll be working at my current employer (unless of course something were to happen to prevent that) till I can retire for the minimum length of service for that pension (public sector job). I didn't know if a year of pension contributions was worth the getting rid of the debt and the lack of savings.

Dazed_and_C0nfused

Scottyboy_5627 said:

Dazed_and_C0nfused said:

Scottyboy_5627 said:

So I am currently in a position where I am/was around £5,000+ in credit card debt, with a £10,000+ loan for a car and have been offered to have the years worth of pension contributions paid back to me after I left.

My main goal is to reduce the amount of debt I have in total, to reduce/remove the amount of interest I am paying so I can finally start putting money into my savings. My loan which was applied for to pay off a PCP agreement and already incudes the interest I need to pay back.

I had a credit card which had an amount on there which is interest free and the rest was not. So I was paying interest on that part.

I had roughly £1000 in savings, sitting there earning little to no interest. Obviously, the interest on the credit card meant I was still owing more than I was earning in savings.

On top of that, my last employer offered to have my pension contributions paid back to me. This totalled just over £1600. That was also after they deducted 20%. But it would appear I earned interest on it (which the 20% deductions took into account from looking at the letter).

That plus what I had in savings was used to take a massive chunk out of my credit card, therefore, putting me into the interest free part. But obviously, I plan to have the remainder paid off before focusing onto savings again and to clear it before the interest free period ends.

The confusion lays with the pension contributions that were paid back to me. It was a Local government pension scheme. The letter did state that I MAY have to declare that payment to me to HMRC titled TAX ON INTEREST FOR LATE PAYMENT. I wasn't sure if this meant whether the interest earned on it took me into the next tax band I would need to declare it. From my calculations, I would be nowhere near entering the next tax band (of 40%) so shouldn't have to declare it? But I also might be getting it really wrong on the reasons as to why I would have to declare it.

Additionally. My plan is to pay off the remainder of the credit card debt I have before going back to contribute to savings, just so that it is call cleared. it's just whether this is a smart thing to do or not (it would be paid off approximately before February 2025, I have a spread sheet)?

After that point, my plan was to build back up my emergency savings pot. Then look to put savings into other areas (LISA as well as spreading it across other savings and funds (Premium bonds, investments including a very small amount in crypto)), while also chipping In a bit more every month into the loan, onto of the agreed monthly payments (once the emergency fund is back to what it should be).

The main crux of this post Is whether or not I need to declare that £1600. But a critique of my further savings/debt payment plan is viable and good.

Why would you need to declare the £1,600?

Or was that the interest you received?  Your post seems to suggest it was predominantly the refund of your contributions (after tax).

You seem very calm about the employer contributions you have lost.  Did you really not consider a transfer was the better long term option?

I'll break down the amounts including totals and deductions:

Total Contributions: £1758.22

Less Certified Amount: £0
Less Tax at 20%: £351.66
Interest for late payment: £273.77
Refund payable: £1680.43

It's my lack of knowledge around pensions and whether any of it needs to be declared for having it paid to me (I was 29 after I left working there for 1 year and they gave me the option to have that year of contributions paid).

Regarding whether I considered transferring the amount = Yes very much so. Again, it may have been my short term thinking over ruling the long term. I'm now 32 turning 33, having had to move back home with little to no savings. I'll be working at my current employer (unless of course something were to happen to prevent that) till I can retire for the minimum length of service for that pension (public sector job). I didn't know if a year of pension contributions was worth the getting rid of the debt and the lack of savings.

How much was the transfer worth?  I'm guessing it would have been well in excess of £5k with the employer contributions added to your £1,758 😢

As for HMRC I would say they are only likely to be interested in the £273.

Scottyboy_5627

Dazed_and_C0nfused said:

Scottyboy_5627 said:

Dazed_and_C0nfused said:

Scottyboy_5627 said:

So I am currently in a position where I am/was around £5,000+ in credit card debt, with a £10,000+ loan for a car and have been offered to have the years worth of pension contributions paid back to me after I left.

My main goal is to reduce the amount of debt I have in total, to reduce/remove the amount of interest I am paying so I can finally start putting money into my savings. My loan which was applied for to pay off a PCP agreement and already incudes the interest I need to pay back.

I had a credit card which had an amount on there which is interest free and the rest was not. So I was paying interest on that part.

I had roughly £1000 in savings, sitting there earning little to no interest. Obviously, the interest on the credit card meant I was still owing more than I was earning in savings.

On top of that, my last employer offered to have my pension contributions paid back to me. This totalled just over £1600. That was also after they deducted 20%. But it would appear I earned interest on it (which the 20% deductions took into account from looking at the letter).

That plus what I had in savings was used to take a massive chunk out of my credit card, therefore, putting me into the interest free part. But obviously, I plan to have the remainder paid off before focusing onto savings again and to clear it before the interest free period ends.

The confusion lays with the pension contributions that were paid back to me. It was a Local government pension scheme. The letter did state that I MAY have to declare that payment to me to HMRC titled TAX ON INTEREST FOR LATE PAYMENT. I wasn't sure if this meant whether the interest earned on it took me into the next tax band I would need to declare it. From my calculations, I would be nowhere near entering the next tax band (of 40%) so shouldn't have to declare it? But I also might be getting it really wrong on the reasons as to why I would have to declare it.

Additionally. My plan is to pay off the remainder of the credit card debt I have before going back to contribute to savings, just so that it is call cleared. it's just whether this is a smart thing to do or not (it would be paid off approximately before February 2025, I have a spread sheet)?

After that point, my plan was to build back up my emergency savings pot. Then look to put savings into other areas (LISA as well as spreading it across other savings and funds (Premium bonds, investments including a very small amount in crypto)), while also chipping In a bit more every month into the loan, onto of the agreed monthly payments (once the emergency fund is back to what it should be).

The main crux of this post Is whether or not I need to declare that £1600. But a critique of my further savings/debt payment plan is viable and good.

Why would you need to declare the £1,600?

Or was that the interest you received?  Your post seems to suggest it was predominantly the refund of your contributions (after tax).

You seem very calm about the employer contributions you have lost.  Did you really not consider a transfer was the better long term option?

I'll break down the amounts including totals and deductions:

Total Contributions: £1758.22

Less Certified Amount: £0
Less Tax at 20%: £351.66
Interest for late payment: £273.77
Refund payable: £1680.43

It's my lack of knowledge around pensions and whether any of it needs to be declared for having it paid to me (I was 29 after I left working there for 1 year and they gave me the option to have that year of contributions paid).

Regarding whether I considered transferring the amount = Yes very much so. Again, it may have been my short term thinking over ruling the long term. I'm now 32 turning 33, having had to move back home with little to no savings. I'll be working at my current employer (unless of course something were to happen to prevent that) till I can retire for the minimum length of service for that pension (public sector job). I didn't know if a year of pension contributions was worth the getting rid of the debt and the lack of savings.

How much was the transfer worth?  I'm guessing it would have been well in excess of £5k with the employer contributions added to your £1,758 😢

As for HMRC I would say they are only likely to be interested in the £273.

They did send me the amount in a separate letter but It's gone now and I can't for the life of me remember.

I will keep that in mind. Thanks for the responses.

greatkingrat

The £273 interest should be covered by the £1000 savings allowance, and it sounds like the OP doesn't have much other interest income, so I don't think there is any tax due.

ader42

It’s only the £273 that matters and even that doesn’t matter due to the £1,000 savings allowance as mentioned by greatkingrat

https://www.gov.uk/apply-tax-free-interest-on-savings