Claiming tax relief on pension overpayments

VNX

Hello all,

My workplace pension isn’t great 5pc employee 3pc employee but to benefit from tax relief I’d like to increase my contributions into my Aviva pension.

my employer for the last four months has said I can’t increase my contributions due to some software update seemingly this is never ending. 

If I make my own payments into the Aviva pension can I claim the tax relief base to circumvent the stalling from my employer? Would this be done via a self assessment forum to HMRC?

thank you

Albermarle

Normally if you make a personal contribution to a pension, the provider claims basic rate tax relief for you from HMRC and adds it to the pension. You would only have to have contact with HMRC if you were a 40% taxpayer and wanted to claim the additional relief.

With a workplace pension this should normally still work, but because the pension is linked to payments coming from your employers payroll dept, then a personal payment coming out of the blue may not be handled correctly.
You need to speak to Aviva to check it will be OK. 

xylophone

Are you a basic rate tax payer?

Is your workplace scheme "relief at source"?

https://www.aviva.co.uk/business/workplace-pensions/sme/training-centre/relief-at-source/

Have you asked Aviva whether you can make contributions independently?

VNX

Sorry I was light on detail I am a basic rate tax payer my scheme is salary sacrifice and on the Aviva app I can make regular or one off payments 

molerat

So your SS contributions do benefit from tax relief albeit in a roundabout way via reduced salary.  I would be wary of making one off personal payments as it can prove to be an uphill struggle to claim tax relief from an effectively net pay scheme, you would need to check with the provider if they will treat personal payments as relief at source and reclaim the tax.  Is it possible to make those payments as net pay via payroll or sal sac ?

VNX

I want to up my payments via my salary but my employer is saying I can’t up them from 5pc due to some software update but this has been what I’ve been told now for four months with no end in sight so just thinking of making my own payments in and then get the tax relief 

molerat

Getting basic rate tax relief when paying in to a net pay scheme is fraught with problems, several threads on here about it, HMRC "do not understand" is the big concern.  So you need to check with the provider that they will treat these contributions as RAS and claim the tax back otherwise it would save many hours of conversations with HMRC and losing the will to live by opening a SIPP and contributing to that.

Marcon

molerat said:

So your SS contributions do benefit from tax relief albeit in a roundabout way via reduced salary.  I would be wary of making one off personal payments as it can prove to be an uphill struggle to claim tax relief from an effectively net pay scheme, you would need to check with the provider if they will treat personal payments as relief at source and reclaim the tax.  Is it possible to make those payments as net pay via payroll or sal sac ?

There's no such thing as an 'effectively net pay' scheme (although I know what you mean!) - it's either net pay or Relief at Source scheme, and my guess would be that it's the latter, with employee contributions made by salary sacrifice to get the NI saving as well as the usual tax saving.

OP, check with Aviva if this is a 'Relief at Source' scheme, which is highly likely to be the case. If so there shouldn't be any issue with you making personal contributions direct to the scheme, and Aviva will add tax relief at the basic rate.

VNX

Thank you all I am on a live chat with Aviva now.

they confirm it is salary sacrifice.

is opening a SIPP going to be easier I wonder 

Marcon

VNX said:

Thank you all I am on a live chat with Aviva now.

they confirm it is salary sacrifice.

is opening a SIPP going to be easier I wonder 

If it's an auto enrolment scheme (and from what you've said, that's what it is), then it must permit personal contributions - employers cannot insist on employees using salary sacrifice (and indeed anyone on minimum wage can't use salary sacrifice). 

Ask if can you make personal contributions direct to Aviva without going through payroll, and also ask them to confirm that it is a Relief at Source scheme.

VNX

Thank you all for your help, you’ve all be very helpful and informative. I’ve had real difficulties getting hold of Aviva which is why the wisdom of this board would help. After a long wait I got through to someone who said if I make payments direct the 20pc tax relief will be added by Aviva 

so I lose the NI benefit I guess as not being done via SS but seemingly my employer is being impossible so easier just to maybe payments direct I think