claim tax relief on pension: impossible! I need a professional...

molerat

Shall I include all my pension contributions including salary sacrifice ones… or not?

Most certainly not, sal sac contributions are not "your contributions" even though your payslip "incorrectly" shows them deducted from your pay, they are employer contributions which you have exchanged for a reduced salary. HMRC are not the least bit interested in them from a reclaim tax perspective, including them severely confuses matters.

DRS1

I may only add to the confusion here but there is a third way of paying pension contributions as well as salary sacrifice and relief at source. It is called net pay. For that the pension contribution is deducted from your gross pay before the tax is worked out. Unlike salary sacrifice it does not save you or your employer any NICs. When the HMRC letter says "you need to find out what type of pension contributions are taken from your pay before tax is worked out. Please ask your pension administrator to confirm if your pension contributions are taken from your pay before tax is worked out" I am wondering if they want to know if you are paying under a net pay arrangement. For a net pay arrangement you would not be claiming any tax relief because the contribution is deducted before they work out your tax so you got full relief up front.

I think the way to answer that question would be to say "I have checked with [insert whoever you check with eg payroll at your firm/the old firm] and can confirm that all regular contributions to the [insert names] pension schemes are paid by the employer and use salary sacrifice so that my salary was reduced by the amounts I would otherwise have paid as employee pension contributions. As these are all employer contributions I am not claiming any tax relief in respect of those contributions."

Then when it comes to the second question "If your pension contributions are taken or paid after tax, and/or you have paid a lump sum into a pension. Please send me evidence from your pension provider showing payments made for each tax year you're claiming for. The evidence should show the net amount of contributions you actually paid, the gross amount after the company has added the tax relief for you" I think you should say something like

"The pension contributions I have made as personal contributions have all been paid as lump sums and have come from my personal bank account. I enclose statements from [insert names of pension providers] showing the net amount of employee contributions the tax relief claimed and the gross amount after tax relief for each of the tax years [2023/4, 2024/5 and 2025/6 or whichever the right years are]. Although you do not ask for it I also enclose copies of my bank statements showing the net payments I have made in each year."

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81889016#Comment_81889016

I'd reply to HMRC along the following lines. From what you've written in previous posts, I think you have already suggested to HMRC that some of your contributions were taken from your pay before tax (because the 'salary sacrifice' penny hadn't dropped). If that's the case, I suggest you include the sentence in italics below, which should finally lay that to rest.

Dear….

Thank you for your letter of [date].

I have now checked the position and can confirm that the only personal contributions I have made in the tax years 2023/24, 2024/25 and 2025/26 are the lump sum payments I made direct to my Scottish Widows Group Personal Pension. I attach copies of the relevant extracts from my bank statements confirming the dates/amounts, and copies of the relevant documentation from the pension provider confirming receipt of these. These are the only contributions for which I am seeking higher rate tax relief.

All other contributions during the tax years in question have been employer contributions. I apologise for the confusion I inadvertently created by not realising that this is the correct classification where an employee utilises salary sacrifice.

I hope you have now have all the information you require.

Yours sincerely

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81889128#Comment_81889128

All personal pensions are Relief at Source, so the net pay method is irrelevant.

Triumph13

No-one seems to have picked up on this point from OP:

"I should have done that calculation when I first deposited, I made sure I was under the allowance that I believe was 60K or your annual earnings. As I said the first year I used the "carry forward" though, so that year it might have gone higher than my annual salary"

If your gross personal contribution is more than your salary (after salary sacrifice) then you are going to owe HMRC money as the limit is the LOWER of £60k or relevant earnings for the tax year in question.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81889163#Comment_81889163

Or maybe you can ask the pension scheme to refund any excess contributions (not sure if there is a time limit for that)

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81889154#Comment_81889154

Oh OK I had forgotten that the contributions went to a group personal pension scheme. The way the question was phrased made me think of net pay.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81889163#Comment_81889163

In her post of 7 February, OP said:

I even recently paid extra income tax they asked me for, but they owed me so much more!

The point was picked up in my post of 13 February at 12.23 am. Even if there was a slight 'overspend'(!) that year, it sounds as if OP has carry forward available from the years prior to 2023/24, so the next two years are, one hopes, within the necessary limits.

loukitten

Thanks everyone again.
I've received a reply from MoneyHelper, unfortunately they don't provide help for tax related issues but they sent me a long email explaning pension/tax matters and I will read it carefully.

I'll also try to call HMRC again before attempting another claim, just to see if I can get more info of what went wrong the first time, but I'll probably end up writing something along the line of what Marcon (and everyone else) suggested.

For now, a virtual 🍺or ☕️ to all of you!

loukitten

UPDATE!

I did call HMRC eventually and had a chat with a generic advisor that seemed to think that I might have just need to have a pension document stating my name next to the extra lump sums I had added to my pension.

My pension provider was able to provide that and I did the whole claim again with this new document only.

I finally received the calculation of me tax relief for 2 financial years, I got a decent amount back, and then I got called by HMRC because of my complain (very very late) and they told me that it was all their mistake and I had provided ALL the sufficient documents from the very first claim, so they apologised and sent me £100 extra for this… not that is an amount sufficient to justify the stressful months spent on this.

I stupidly forgot to ask why the last financial year was not included, but I'm hoping it's just because it has literally just finished… I'll have to call them again probably.

Anyway, thanks again for all your help and, if anyone ever comes across this post with similar issues I'd say:

- probably having a document that clearly puts your name next to the lump sum (even if this could be inferred elsewhere) could help… BUT
- if you believe everything is correct and it seems they're just replying random things without specifying what's wrong, definitely COMPLAIN as soon as possible and try to get them to reply soon.

I recall complaining twice, but somehow I only receive one answer… but they should at least tell you something like "we're still working on your complain".

cheers