Pension tax relief at the higher rate

Lurking_Lawyer

I wonder whether anyone on here may be able to assist with a general query I have regarding tax relief on pension contributions?

I am a higher rate tax payer. I recently became aware that it is my responsibility to recover tax relief at the higher rate on my pension contributions and that, unlike basic rate tax relief, it isn't don't at source.

Sounds obvious, I know, but I haven't had to fill in a self-assessment form for a number of years now (they stopped sending them to me after 2-3 years when I had nothing to declare other than what had been paid to me via PAYE) and I somehow never twigged that it was up to me to claim higher rate relief back :doh:

I assume I'm going to have to go into the local tax office and seek some advice on how to proceed with it, but I was hoping I might get a general steer from someone on here.

Obviously, going forwards, I'm going to have to get HMRC to start sending me a self-assessment form again. But in terms of claiming tax relief for previous years, does anyone know (a) whether it's possible at all and (b) if so, how far back I'm likely to be allowed to claim?

I've been a higher rate tax payer since around 2001 so, in theory, it could be 6-7 years. I don't for a moment think I'll be allowed to go that far back but does anyone have any idea on how far back I may be allowed to claim for?

Much obliged in advance

noh

Six years.
Here is a previous thread on the subject
http://forums.moneysavingexpert.com/showthread.html?t=835431
Have you been declaring income from saving etc that you may need to pay additional tax on?

Nigel

dunstonh

Just notify the HMRC of the contributions going back in time. Its very simple and they are used to this sort of thing.

Lurking_Lawyer

noh wrote: »

Have you been declaring income from saving etc that you may need to pay additional tax on?

Nigel, very much obliged for that - I'll have a look at that thread - thank!

No concerns about unpaid tax on savings interest. What little savings we have as a family are either in ISA accounts and so not taxable or in the name of my wife, who doesn't work and so claims the interest untaxed.

jem16

Lurking_Lawyer wrote: »

I am a higher rate tax payer. I recently became aware that it is my responsibility to recover tax relief at the higher rate on my pension contributions and that, unlike basic rate tax relief, it isn't don't at source.

How do you pay into your pension?

If it's a company pension paid directly from your salary then you already have full tax relief at source because pension contributions are taken from gross pay.

If it's a personal pension which you pay into from net pay then you should apply for the extra relief.

Lurking_Lawyer

It's stopped directly out of salary by my employer, and they pay a chunk into the same pension pot.

I'm not sure that full tax relief is claimed though. What tipped me off was a letter from the pension company saying that, with the change in income tax rates from 22% to 20%, my contribution would change slightly, but there was also a throwaway comment to the effect of "Oh, and don't forget, you continue to have to reclaim tax relief at the higher rate via your tax return".

jem16

Lurking_Lawyer wrote: »

It's stopped directly out of salary by my employer, and they pay a chunk into the same pension pot.

Company pensions are usually paid from gross salary.

You'll need to find out if your pension contributions are from gross pay or net pay. You can check by looking at March's payslip. If your taxable pay is less than your gross salary by the amount of your pension you are paying from gross salary. In that case you are getting full tax relief already.

nicko33

I was/am in a similar situation.
I have a hybrid company scheme, part Final Salary, part Defined Contributions.
Both contributions are paid directly by the company from my wages, the FS being paid before tax, and the DC being paid after tax.
The DC pension company then reclaimed Basic Rate on my contributions to the DC.

I was near the threshold for Higher Rate tax, but also contributed to company AVCs which meant the remainder of my income was all at Basic Rate

About a year after getting a pay rise, I realised I was paying some Higher Rate tax.
So I contacted HMRC and got a refund cheque for previous years payments, and an upwards adjustment to my tax code to cover future payments.

Vancat

I administer our Standard Life GPP scheme. I’m the payroll manager and collect the deductions from pay.
All our contributions are deducted net of B/R tax, i.e. was 22%, now 20%.
Standard Life claim back the 20% and add to each person’s plan every tax year.
We advise higher rate tax payers to obtain a certificate of contributions from SL, then apply to HMRC for the difference between 40% and 22%: 2007-8 will be 18%, from 2008-9, 20%. HMRC then make the refund to the individuals concerned, or offset it against their allowances for the following year.
VC

Sheryl3

Hello - based on salary of 43,335, could you advise how much additional AVCs should be paid per month, to bring the salary below the higher rate tax threshhold?:A

jem16

Sheryl3 wrote: »

Hello - based on salary of 43,335, could you advise how much additional AVCs should be paid per month, to bring the salary below the higher rate tax threshhold?:A

Best to start your own thread for this. Just click on "New Thread" at top left of forum.

As to the answer it depends on your tax code. Also AVCs are not necessarily the best option.