Higher rate tax relief?
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Mr_Curious
Posts: 118 Forumite
Hi Guys,
I'm looking for some wisdom. I recently received a latter from the tax man informing me of a rebate :j.
On the paperwork I noticed I edged into the higher rate tax bracket for 2017-2018. Does that mean I can claim an additional pension contributions for that year? And If so, how easy is it to do?
Thank you in advance,
Mr_C
I'm looking for some wisdom. I recently received a latter from the tax man informing me of a rebate :j.
On the paperwork I noticed I edged into the higher rate tax bracket for 2017-2018. Does that mean I can claim an additional pension contributions for that year? And If so, how easy is it to do?
Thank you in advance,
Mr_C
0
Comments
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Morning. Sorry I could not figure out from your post what has happened. Rebate for what year , rebate why , what is your status (employed self employed etc), have you made additional pension contributions in that year to claim - I doubt it could be done retrospectively .The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
Apologies for the lack of detail.
I received a letter in the post explaining that I had paid too much tax in the year 2017-2018 and how to claim the rebate. I am employed. Other than my normal pension contributions I have made no additional contributions.
So now that I am in the higher rate tax bracket and looks like I'll be staying here, does this mean I will need to start filling in a self assessment?
It's a new situation for me and I'd like to understand how to make the most of it.
Thank you,
Mr_C0 -
You only need feel in a tax assessment return if HMRC ask you to. Provided you are employed, taxed through PAYE, and only pay pension contributions into your employer's scheme HMRC will require no further information - the system should sort things out.
I dont understand your link between receiving a tax refund and paying Higher Rate Tax. Perhaps if you let us know your gross pay, tax code and current pension contribution people could make detailed comments.0 -
.You only need fill in a tax assessment return if HMRC ask you to
Or if you have other income that HMRC are unaware of, e.g. Buy to let, investment income and chargeable capital gains. Perhaps see https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return for more info.0 -
Does that mean I can claim an additional pension contributions for that year? And If so, how easy is it to do?
You cannot 'contribute' to previous tax years once they've finished. Especially with a view to (as I suspect you want to) reduce the gross pay that year to under the 40% limit.
The only thing that can be 'carried forward' is unused contribution allowance to allow you to contribute more than the limit (more than likely the normal £40,000 limit in your case) in the current tax year.
Tax relief on those contributions will generally be restricted to whatever tax applied on the contributions (i.e. you cannot claim back more 40% tax than has actually been paid. However if you contribute close to your gross wage that year, you can claim 20% relief on wages that fall within your tax free allowance that didn't actually get taxed at 20%)
Normal caveats apply of course (you can't contribute more than you earn in the current tax year, even if your allowance including carry forward is more than that. The £40,000 is reduced if you earn enough etc.)Conjugating the verb 'to be":
-o I am humble -o You are attention seeking -o She is Nadine Dorries0 -
You only need feel in a tax assessment return if HMRC ask you to. Provided you are employed, taxed through PAYE, and only pay pension contributions into your employer's scheme HMRC will require no further information - the system should sort things out.
I dont understand your link between receiving a tax refund and paying Higher Rate Tax. Perhaps if you let us know your gross pay, tax code and current pension contribution people could make detailed comments.
The link to the tax refund is that the paperwork made it clear what tax I paid. I have not fallen into this position before.
In terms of my details:
Gross income - £42708 (Salary £23k, the rest is bonus/commissions)
Car benefit - £4499
Tax code for 2017-2018 was 341L
Pensions contributions are made via salary sacrifice/paye0 -
If you know how much of your income was taxed at 40% then paying that amount extra as a pre-tax or SS payment into your employer's pension or paying 80% of that amount into a private pension would have removed you from HRT. In the latter case HMRC refund the 20% basic rate tax directly to your private pension and you claim back the 20% higher rate part from HMRC.
In your case I guess you dont know your income until the end of the year which might make getting the numbers exactly right somewhat difficult.0 -
If your contributions for your workplace pension are made by salary sacrifice , you do not have to worry about claiming anything back or contacting HMRC.
AS the money is taken out of your salary before tax is taken , you automatically get the right rate of tax relief.
For example if you had a salary of £70,000 , and paid 10% by salary sacrifice . Then£7,000 would not be taxed at 40%.
If you earned £30,00 and paid 10% then £3000 would not be taxed at 20%..0
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