Not Eligible for Tax Relief

Millymoo9 · 9 May 2018 at 7:55AM

Hello everyone. I would just like some advice please on this Personal Pension situation. Last year I was still on the books with a care company but had turned down work and was then not offered any ( I didn’t really want to do the job anymore as I now help and support my father in careing for my Mum who has dementia and it can be depressing ). I tried for part time shop work but wasn’t having much luck (at 62 years old) so thought as I had being having carers allowance for a few months that for the first time ever I would apply for income support. I started a pension with the care company only a couple of years before ( Nest) and had been paying in as much as I was allowed to each year since. I had read that I could still pay in £2800 even if not working so decided it might be best to do so. On the Nest website it says that you have to state if you are eligible for tax relief, I thought as I wasn’t working that I wasn’t eligible. Only after reading and talking to others I realised that I was! It was too late then, so Nest advised me to write to HMRC and asked what they could do. They said that they would give me extra tax relief ( I told them that I might take my pension last year in chunks, but didn’t). About a month after I did get a part time job ( didn’t claim income support after) and my hours were 16 so I then payed monthly into my pension so I didn’t loose my carers allowance. I didn’t think about how much I would earn last year. I also had tax credits but only for the last few months . So It ended up when the job finished ( seasonal) that I had payed too much in ( a bit more than my earnings plus some tax relief on monthly payments) . I started the job again at Easter ( had a bit of income support over December to then) and stated payin monthly into the scheme again to keep carers allowance and noticed no tax relief. So HMRC when I spoke to them say that because of my projected low earnings this year that I am not eligible for tax relief. I think that I need to pay them back the ( approx)£200 tax relief for last year. It says on the website that you can still have tax relief up to £2880 on earnings if you don’t earn much. I am confused! What do you think ? Sorry for the long post! Thanks in advance

Brynsam · 9 May 2018 at 8:37AM

As a modest earner, you are eligible for tax relief at the basic rate on contributions of the higher of your earnings OR £3,600 (i.e. £2,800 net + tax relief at 20%), so doesn't sound as if you need to repay anything.

Useful reading: https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/tax-relief-on-pension-contributions-explained-a27f53z7qg3f

Millymoo9 · 9 May 2018 at 9:18AM

The problem is that my employer has enrolled me this year with Nest, but as my earnings are low he doesn’t have to pay in , but I can . So Nest has asked me to clarify if I am eligible for tax relief. As I say , I phoned HMRC yesterday and spoke to a nice lady and explained everything to her, she then went away for quite sometime and then came back and said that I wasn’t eligible. I think that she may have put all the details into the computer and that was the result. She said that I could claim back if I was a higher tax payer...which, of course, I’m not. That was the general tax enquiry line. There is one especially for pensions. I wonder if I should phone them?

xylophone · 9 May 2018 at 11:54AM

See
https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/how-will-i-know-which-workers-are-eligible-for-tax-relief.html

NEST operate "relief at source" so you should be receiving tax relief of the appropriate amount?

http://www.thisismoney.co.uk/money/pensions/article-5706383/Millions-women-cruelly-robbed-pension-tax-breaks.html

michaels · 9 May 2018 at 12:17PM

OP did you pay in 2880 plus then some percentage of earnings so your total pay in including relief exceeded both 3600 and your earnings?

In this case you will have to pay a tax charge equal to the tax relief on any payment above the 2880 net 3600 gross unfortunately generally this tax relief can not be repaid by the pension company.

xylophone · 9 May 2018 at 12:45PM

OP, how much is your gross annual salary?

How much do you wish to contribute to the pension?

Millymoo9 · 9 May 2018 at 1:18PM

Hello, sorry for late reply. Last year My lump sum plus monthly contributions came to a total of £3440 with tax relief of £160. The exact total came to £3600.25 ( figures from Nest). My total earnings were £2928. On the Nest contribuitions page this tax year it says on my contributions !!!8216; not eligible !!!8216; on the tax relief contributions. If I get tax relief this year I would like to pay in as much as I can because of my age. My earnings should be about £4000 this year. Thanks

xylophone · 9 May 2018 at 2:52PM

Even without "relevant earnings" a person can make a net contribution of up to £2880 in a tax year and receive tax relief, bringing the total pot to £3,600.

I would like to pay in as much as I can because of my age. My earnings should be about £4000 this year.My earnings should be about £4000 this year. Thanks

With gross relevant earnings of £4000, you could pay in up to £3,200 in a tax year and receive tax relief of up to £800.

NEST operate RAS - have you explained that while you earn too little to be auto enrolled/for your employer to be obliged to contribute, you will earn £4000 in the current tax year and so would wish to contribute £3200 to the pension and receive tax relief of £800?

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/how-will-i-know-which-workers-are-eligible-for-tax-relief.html

Workers are eligible for tax relief if they're under the age of 75 and:

they have UK earnings that are subject to income tax for the tax year
they're resident in the UK at some time during the tax year

they were resident in the UK at some time during the preceding five tax years when they joined the pension scheme.
Contributions paid after a worker's 75th birthday aren't eligible for tax relief.

The maximum amount of contributions on which a worker can claim relief is whichever of the following is greater:

the basic amount - currently £3,600 including tax relief
the amount of the individual's UK earnings for the tax year.
This means that a worker who has no relevant UK earnings may still qualify for tax relief on contributions into a registered pension scheme up to the basic amount.

The tax relief is available even if the worker is a non-taxpayer.

xylophone · 9 May 2018 at 2:56PM

If you are finding the NEST system too difficult to negotiate and as you are not receiving any employer contribution, would it be simpler to give up on NEST and just open a simple stakeholder?

https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/aviva/

Millymoo9 · 9 May 2018 at 3:14PM

Thank you all for your help. To be fair, it!!!8217;s not really Nest that is the problem. In my personal settings I have to state whether or not I!!!8217;m eligible for tax relief, and I have stated that I am. It!!!8217;s on my contributions page where Nest have to claim it from HMRC that it says that I!!!8217;m ineligible for tax relief on the contributions. It!!!8217;s quite complicated because the Carers Allowance unit told me on one occasion that my pension payments would be calculated over the whole years contributions but also told me that a lump sum payment doesn!!!8217;t count, only my monthly payments. Nest have told me that it!!!8217;s not their decision, it!!!8217;s up to HMRC.

Millymoo9 · 9 May 2018 at 3:18PM

Sorry, but I don!!!8217;t know where some of these numerals are coming from on my responses?!!!!55357;!!!56833;

Not Eligible for Tax Relief

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