Switched from Relief At Source to Salary Sacrifice

Scruffy_Meee

I have asked a very similar question previously but just want to clarify things as its getting to that time of year where I have to fill in a tax return -

I am a higher-rate taxpayer and anything over the 20% tax threshold I was paying into my pension scheme rather than paying the 40% tax, up until December last year I contributed to an employee pension scheme operated by my employer under the Relief at Source model, From December it switched to Salary Sacrifice. Historically the HMRC had adjusted by tax code to for the additional 20% tax I was paying. I notified them of the change in November and was told they would change by tax code in December back from 1780L to 1257L. They initially told be the change would start from December, what they didn't tell me was it was backdated to April, so I had to then pay the tax difference back around £1300.

Looking ahead to the tax return, I will have approximately seven months of contributions under the Relief at Source model and five months under Salary Sacrifice.

Last year I entered by Pension contributions in the section under Tax reliefs - "Paying into registered pension schemes and overseas pension schemes" Box no 1. It does say "Do not include payments you make to your employer’s pension scheme which are deducted from your pay before tax or payments made by your employer." So I presume I would put on the initial 7 months of Relief At Source from this year here but do I need to fill in anywhere else for the remaining 5 months of Salary Sacrifice contributions.

TIA

cc123mm456

You are correct. Only the payments to the pension using the Relief at Source (RAS) method should be entered on the tax return.

For Salary Sacrifice pension contributions, you are receiving a reduced salary, and the employer is contributing the amount of that salary reduction direct to your pension as an employer contribution. This means that you have not paid tax on that amount, and so there is no tax relief claim needed.

I'm sure you'll know this already, but for clarity, the number that you enter for the RaS contribution is the gross contribution (your net contribution plus the 25% tax relief claimed by the pension scheme).

It seems that, due to the incorrect tax code change, you should be due a refund after your tax return is submitted. I think that the tax code for the final few months should have been 1257LX, on a month one basis rather than cumulative.