Higher rate taxpayer pension reclaim 18%

kam1000

I am a higher rate taxpayer and someoneone told me that I should be reclaiming extra money from the taxman on my contributions. Can anyone explain this please?

dunstonh

Higher rate taxpayers are entitled to get 40% tax relief on the contributions (above the higher rate threshold). With certain pensions this is handled via your payslip. However, when a direct debit is involved it is handled via your tax return.

How do you pay into your pension?

kam1000

The pension contribution is taken out of my salary before I get my wages. It shows up as a deduction on the wage slip. But it is a personal plan to which my company does not contribute. Thank you

jem16

kam1000 wrote: »

The pension contribution is taken out of my salary before I get my wages. It shows up as a deduction on the wage slip. But it is a personal plan to which my company does not contribute. Thank you

If it's taken from gross salary you already get full tax relief at source. If it's taken from net salary you may still be able to claim via your tax return.

paddytt

Hi

The amount shown on my payslip is exactly the amount that's credited to my pension account minus 20%. I am a 40% taxpayer. Should I be re-claiming the full 40% and where on the Self Assessment form do I do this?

thanks!

paddy

parallax_20

You can actually call up your tax office and give them the details of your monthly contributions. This would normally be a fixed % of your basic salary. From this they will work out what your additional 20% relief would be and amend your tax code accordingly to incorporate this. You should be able to claim previous tax years also if you have the contributions for each of the past years.

I recently did this after signing up to my current employers pension scheme, which shows up as a Net Pension Payment on the payslip which has just the basic 20% tax deducted. The pension provider told me I needed to claim the extra via Tax Returns or contact them directly to get the extra 20% relief. Its the first time I've encountered it, my previous pension was deducted from Gross, so never had to think about it in the past.

Loughton_Monkey

paddytt wrote: »

Hi

The amount shown on my payslip is exactly the amount that's credited to my pension account minus 20%. I am a 40% taxpayer. Should I be re-claiming the full 40% and where on the Self Assessment form do I do this?

thanks!

paddy

It is not usually seen as 're-claiming' on the form. You will find that the Self Assessment form simply asks for your pension contributions. Any excess tax you can reclaim will drop out of the normal calulations, along with any other over/under payments that may appliy to other sections (like capital gains). Remember, for example, that any savings interest you have received at 20% tax deduction will be taxed at a further 20%.

paddytt

OK thanks. Do I just claim the amount that I have paid, or the total including what my company has paid as well?

thanks

TT

Loughton_Monkey

paddytt wrote: »

OK thanks. Do I just claim the amount that I have paid, or the total including what my company has paid as well?

thanks

TT

As I have said, you do not "Claim" anything specifically. A self-assessment form simply captures all your relevant financial information - including pension contributions, savings interest, salary, and tax paid. You simply answer all the questions.

It then calculates the resulting overall tax 'adjustment' which is not specific to any breakdown. For example, you might just get a £300 rebate - which could for all I know, result from £500 rebate on your pension (Higher rate), minus £250 extra you have to pay because your savings interest is only taxed at 20%, and the other £50 because of an error in your employer's calculation of PAYE.

If you have some knowledge in these matteres, then it is not difficult to 'audit trail' any adjustment to its source.

paddytt

Sorry, I meant to say "Enter" not "Claim". So in section 4, first box, do I enter the total of EE and ER payments or just my EE total?

So far I have entered just my EE total, the result is that my 2009/10 tax has gone from a large tax payment to a small tax refund! Result!

regards

TT

Loughton_Monkey

paddytt wrote: »

Sorry, I meant to say "Enter" not "Claim". So in section 4, first box, do I enter the total of EE and ER payments or just my EE total?

So far I have entered just my EE total, the result is that my 2009/10 tax has gone from a large tax payment to a small tax refund! Result!

regards

TT

Personally, not familiar with the current form as I am early retired, now, and avoid higher rate tax.