HMRC say no tax relief on pension contribution as I'm a 20% tax payer

AandP · 6 July 2018 at 8:11AM

Hi I thought I'd start a new post from my previous one as the subject has now moved on.
Just before the end of the last tax year I deposited £14,000 ( this amount to take me close to 100% of my allowance) from a savings account into my works DC pension. The pension provider is BlackRock and they said they would not be able to claim tax relief on my behalf as it hasn't gone through the normal payroll which my normal monthly pension contributions do and which they normally add tax relief at source. They said to contact HMRC to claim tax relief on the £14,000. After several months now and lots of phone calls and evidence provided, the latest letter from HMRC states " I have updated record to include the single amount you have contributed of £14,000 to your private pension, unfortunately there is no tax refund, or relief on that amount as you are only a 20% taxpayer and you are only able to claim tax relief on a pension contribution if you are a 40% tax payer."
I contacted the pension advisory service and explained the situation and they said that I should be entitled to the tax relief so yet another long phone call to HMRC and explained that the amount has not had tax relief applied at source, and that I'm not trying to get extra tax relief as if I was a 40% tax payer. The PAS say I am entitled to tax relief, BlackRock say I'm entitled etc etc but HMRC refuse to accept that a 20% tax payer is allowed tax relief on pension contributions. To try and prove my point I told them that I am getting tax relief at source on my normal monthly contributions even though I am a 20% tax payer but both the first line support ( who by the way was incredibly rude) and then his manager flatly refused to accept that this was possible and just said your application for tax relief has been refused because I am a 20% tax payer.

I have contacted the PAS once again but yet to have a reply.

I'm beginning to doubt my own sanity at this point. Am I unlucky that my application has gone to the wrong people or am I just wrong along with the PAS and BlackRock?

Any Ideas where I go from here?

BoGoF · 6 July 2018 at 8:19AM

Maybe the easiest way to get tax relief would be to complete a Tax Return and enter the £14,000 in the appropriate section.

It is not an everyday occurence and the people on the phone lines do not have the knowledge that not all pension payments get tax relief at source.

Dazed_and_confused · 6 July 2018 at 8:21AM

I would suggest you ask to be referred to someone more senior.

HMRC own guidance covers this subject and there have been several other threads about this on MSE forums.

The common theme is that it is difficult to get HMRC to allow the tax relief, simply because what you have done is outside the "normal" methods of contributing to a pension i.e. relief given automatically via payroll (monthly salary say £2000 less 5% pension = £1900 taxable salary) or personal pension/SIPP contribution where the pension company adds basic rate relief.

Having read your other thread it seems you have paid a gross contribution of £14,000 and are entitled to tax relief of £2,800. This is on the assumption the original P800 calculation you received was correct in all other regards.

The HMRC internal guidance below seems to mirror your situation (from superannuation relief bit onwards). The only difference being that, based on your other thread, you didn't try and claim any tax relief during the year you made the payment so there was no provisional adjustment to your tax code.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye93090

You need to get HMRC to remove the pension relief already included (your original thread refers) and replace it with the correct relief i.e. no basic rate relief added at source so £14,000 gross not £17,500 gross with relief at source as you are currently being credited with (on your P800).

AandP · 6 July 2018 at 8:39AM

Dazed_and_confused wrote: »

I would suggest you ask to be referred to someone more senior.
I tried that and the reply was "I know what I'm talking about, it's my job!" And even when I got to talk to his manager he just backed up first line.

Having read your other thread it seems you have paid a gross contribution of £14,000 and are entitled to tax relief of £2,800. This is on the assumption the original P800 calculation you received was correct in all other regards.
I did mention this but the answer was the addition to the £14,000 on the P800 could just be your normal monthly contributions not added tax relief.

Thanks , ill have a look at that URL

You need to get HMRC to remove the pension relief already included (your original thread refers) and replace it with the correct relief i.e. no basic rate relief added at source so £14,000 gross not £17,500 gross with relief at source as you are currently being credited with (on your P800).

They wouldn't admit that the £17500 could be my £14000 plus relief
The main problem is that my phone calls and letters get dealt with by people who seem not to know my situation and don't even read the previous case notes and as now the latest letter says I'm not entitled that's all they read.
Idealy I need a contact or an address of some one in HMRC who does know how to deal with this situation.

BoGoF · 6 July 2018 at 8:54AM

Or......you cut out the middle man and proceed as I suggested.

Your only other option is to formally complain. The time that is looked into you could have your return completed and tax refund in your bank account.

Dazed_and_confused · 6 July 2018 at 8:55AM

You could try PM'ing an MSE user called Dori2o, he or she works for HMRC and posts regularly on the Cutting Tax board (but never on this board from memory).

They may be able to give you a pointer as to what to ask/say which will get through to HMRC?

They wouldn't admit that the £17500 could be my £14000 plus relief

This makes no sense whatsoever, surely the only way that could possibly have been included on the P800 you received was if HMRC had included it based on the correspondence you had sent to them!! Do they not release £14,000 (which you say you informed them of) grossed up for basic rate tax relief equals £17,500

Dazed_and_confused · 6 July 2018 at 8:57AM

If you do go with BoGoF's suggestion don't forget to declare the tax refund you received via the P800 on the Self Assessment return.

AandP · 6 July 2018 at 9:11AM

Thanks for the suggestion but as I've never filled in a tax return before it's a bit daunting and I fear if I get any of it wrong it could open up a whole new can of worms. To be honest I'm loosing faith in the tax office all together.

AandP · 6 July 2018 at 9:13AM

Dazed_and_confused wrote: »

They wouldn't admit that the £17500 could be my £14000 plus relief

This makes no sense whatsoever, surely the only way that could possibly have been included on the P800 you received was if HMRC had included it based on the correspondence you had sent to them!! Do they not release £14,000 (which you say you informed them of) grossed up for basic rate tax relief equals £17,500

When they don't belive that anyone who is a basic rate tax payer gets tax relief at all what chance do I stand.

Dazed_and_confused · 6 July 2018 at 11:13AM

Well to be fair for a personal pension or SIPP contribution, which based on what you have posted about the P800 you received is what HMRC have treated your payment as, no one who is a basic rate taxpayer would get any additional tax relief over and above the amount automatically added to the fund by the pension company.

The issue is that you didn't make a payment of this type and you need to get HMRC to understand this so they can correct matters.

A Self Assessment return would probably take you about 5 minutes to complete. Based on your posts you would enter your P60 details, the pension contribution, your Marriage Allowance and the tax refund you have already received.

But as far as I'm aware there really is no need to complete a Self Assessment return in this situation.

MEM62 · 6 July 2018 at 11:38AM

AandP wrote: »

Thanks for the suggestion but as I've never filled in a tax return before it's a bit daunting and I fear if I get any of it wrong it could open up a whole new can of worms. To be honest I'm loosing faith in the tax office all together.

That's hardly the case. They are straightforward enough.

I do mine every year as I earn income from a rental property and even with all that goes with that its a simple process. Yours will be no problem - in fact probably easier than all the phone calls you have had to make.

AandP wrote: »

When they don't belive that anyone who is a basic rate tax payer gets tax relief at all what chance do I stand.

It's not a case of what they believe or otherwise - the regulations are the regulations. I think there is a misunderstanding and the operator you are speaking to is not grasping that you have not had the tax relief applied by the pension company- which is the usual way. Some operators are not the sharpest tools.

You have been advised on the easiest way out, complete a tax return. You can take that advice or keep frustrating yourself by struggling to resolve the issue by other means.

Hope you manage to get it worked out.

HMRC say no tax relief on pension contribution as I'm a 20% tax payer

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