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  • FIRST POST
    • Rodders2409
    • By Rodders2409 9th Jul 18, 5:01 PM
    • 50Posts
    • 12Thanks
    Rodders2409
    Been an idiot and need help claiming HR Tax Allowance!
    • #1
    • 9th Jul 18, 5:01 PM
    Been an idiot and need help claiming HR Tax Allowance! 9th Jul 18 at 5:01 PM
    Hello All,

    Thinking I was getting somewhere in understanding Pensions etc, and I've realised I've missed another trick through being rather stupid.

    I'm a HRT payer and have been for the past 15 years.

    Our company transferred all our pensions to SalSac in June 2016, and I continued my payments at the same level of 1200 per month with the company paying 250 per month.

    After spending many an hour on the Forum, supported by the helpful members of MSE, I decided to maximise my SalSac contributions, bringing my PAYE salary below the HRT threshold to maximise tax efficiency. This started 6 months ago.

    Then it dawned on me that I'd made a stupid error, because I have never claimed the additional relief as a HRT payer for the past 15 years or so.

    Just called the Tax Office to find out where I stand and they advise that I can only go back as far as 2014/15, in terms of backdated claims....so 2.5 years.

    Is this correct?
    Is it best to claim that through Self Assessment, as I complete one for a rental property?
    Does the fact that I make significant contributions through Sal Sac have any impact?

    Many thanks for helping stem the tide of stupidity....
Page 1
    • MallyGirl
    • By MallyGirl 9th Jul 18, 5:10 PM
    • 2,820 Posts
    • 7,823 Thanks
    MallyGirl
    • #2
    • 9th Jul 18, 5:10 PM
    • #2
    • 9th Jul 18, 5:10 PM
    Anything done through Sal Sac is gross so no tax to reclaim as you didn't pay tax on the bit you sacrificed to the pension. You might be able to claim a few months before that if the 2.5 yr limit is hard and fast
    • Rodders2409
    • By Rodders2409 9th Jul 18, 5:21 PM
    • 50 Posts
    • 12 Thanks
    Rodders2409
    • #3
    • 9th Jul 18, 5:21 PM
    • #3
    • 9th Jul 18, 5:21 PM
    Thanks Mally

    Is it best and easy to use the Self Assessment route to claim it back?
    • MallyGirl
    • By MallyGirl 9th Jul 18, 6:15 PM
    • 2,820 Posts
    • 7,823 Thanks
    MallyGirl
    • #4
    • 9th Jul 18, 6:15 PM
    • #4
    • 9th Jul 18, 6:15 PM
    I'd call the tax office as you are wanting to claim from previous years and you have presumably already submitted those returns (if you do them).

    sal sac down below HRT is a good choice - saves NI as well, and if relevant can get child benefit back or qualify for 1000 savings interest free of tax
    • Economic
    • By Economic 9th Jul 18, 6:27 PM
    • 268 Posts
    • 253 Thanks
    Economic
    • #5
    • 9th Jul 18, 6:27 PM
    • #5
    • 9th Jul 18, 6:27 PM
    Are you sure there is any tax relief to reclaim? How were the pension contributions taken before salary sacrifice was introduced?
    • msallen
    • By msallen 9th Jul 18, 6:32 PM
    • 853 Posts
    • 937 Thanks
    msallen
    • #6
    • 9th Jul 18, 6:32 PM
    • #6
    • 9th Jul 18, 6:32 PM
    If your pension payments were from gross rather than net pay before the change to sal sac then there's nothing to reclaim anyway as it would be squared up via PAYE.

    Are you sure you actually have a claim?

    ETA: Damn - beaten to it by Economic
    • Triumph13
    • By Triumph13 9th Jul 18, 6:57 PM
    • 1,236 Posts
    • 1,553 Thanks
    Triumph13
    • #7
    • 9th Jul 18, 6:57 PM
    • #7
    • 9th Jul 18, 6:57 PM
    Hi Rodders,
    As others have said, it all comes down to how your pension was arranged in those years before sal sac. The more usual way is for your employer to take the contributions from your pre-tax salary eg income 100, pay 20 to the pension, taxable salary is now only 80. You automatically get full tax 'relief' as the contributions never get taxed.
    The other (and much less common) way is via something like a group personal pension where the employer takes the payment from your post tax salary. Income 100, taxman takes 40, 16 of what's left goes to the pension provider - who reclaims a further 4 from HMRC. You then reclaim another 4.


    Are you sure that you were in the latter type of arrangement not the former?
    • Dox
    • By Dox 9th Jul 18, 7:26 PM
    • 744 Posts
    • 509 Thanks
    Dox
    • #8
    • 9th Jul 18, 7:26 PM
    • #8
    • 9th Jul 18, 7:26 PM
    Hi Rodders,
    As others have said, it all comes down to how your pension was arranged in those years before sal sac. The more usual way is for your employer to take the contributions from your pre-tax salary eg income 100, pay 20 to the pension, taxable salary is now only 80. You automatically get full tax 'relief' as the contributions never get taxed.
    The other (and much less common) way is via something like a group personal pension where the employer takes the payment from your post tax salary. Income 100, taxman takes 40, 16 of what's left goes to the pension provider - who reclaims a further 4 from HMRC. You then reclaim another 4.
    Originally posted by Triumph13
    That used to be the case, but the post-tax salary route is now much more common, given how few occupational schemes (final salary or money purchase) are left.
    • Brynsam
    • By Brynsam 9th Jul 18, 7:28 PM
    • 1,282 Posts
    • 877 Thanks
    Brynsam
    • #9
    • 9th Jul 18, 7:28 PM
    • #9
    • 9th Jul 18, 7:28 PM
    Hi Rodders,
    As others have said, it all comes down to how your pension was arranged in those years before sal sac. The more usual way is for your employer to take the contributions from your pre-tax salary eg income 100, pay 20 to the pension, taxable salary is now only 80. You automatically get full tax 'relief' as the contributions never get taxed.
    The other (and much less common) way is via something like a group personal pension where the employer takes the payment from your post tax salary. Income 100, taxman takes 40, 16 of what's left goes to the pension provider - who reclaims a further 4 from HMRC. You then reclaim another 4.


    Are you sure that you were in the latter type of arrangement not the former?
    Originally posted by Triumph13
    The majority of schemes are now GPPs, so highly likely that contributions were taken from post-tax salary.
    • atush
    • By atush 10th Jul 18, 8:58 AM
    • 16,878 Posts
    • 10,530 Thanks
    atush
    Gutted for you
    • zagfles
    • By zagfles 10th Jul 18, 9:12 AM
    • 13,252 Posts
    • 11,253 Thanks
    zagfles
    The majority of schemes are now GPPs, so highly likely that contributions were taken from post-tax salary.
    Originally posted by Brynsam
    Maybe, but OP needs to check, rather than assuming. OP, if you're not sure, easiest way is check your pension statements and see if tax relief was claimed for your contributions, if they were then it's a RAS scheme and you can claim additional higher rate tax relief.

    Or look at your payslips and see how the "taxable to date" increased from one month to the next. Did it go up by gross earnings, or gross earnings minus pension conts? If it went up by gross earnings then it's a RAS scheme. If it went up by gross earnings minus pension then it's not, and it was what HMRC confusingly called "net pay" which means you get full tax relief in your payslip.
    • Brynsam
    • By Brynsam 10th Jul 18, 9:17 AM
    • 1,282 Posts
    • 877 Thanks
    Brynsam
    Maybe, but OP needs to check, rather than assuming.
    Originally posted by zagfles
    Of course he does - but raising his hopes by saying that GPPs and relief at source are 'much less common' than taking deductions from pre-tax pay isn't helpful.
    • zagfles
    • By zagfles 10th Jul 18, 9:45 AM
    • 13,252 Posts
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    zagfles
    Of course he does - but raising his hopes by saying that GPPs and relief at source are 'much less common' than taking deductions from pre-tax pay isn't helpful.
    Originally posted by Brynsam
    How does that "raise his hopes", it lowers them, he'll only get a tax refund if it was a RAS scheme.
    • chucknorris
    • By chucknorris 10th Jul 18, 10:28 AM
    • 9,629 Posts
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    chucknorris
    I don't understand how he has lost out, was his employer taxing him on his gross (which was not reduced by his pension contributions), so also any additional income (interest, rent etc) would also not have benefited because his gross salary was not reduced.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now mostly hike, gym classes and weight training (also a bit of cycling and swimming), less impact on my joints.
    • zagfles
    • By zagfles 10th Jul 18, 10:38 AM
    • 13,252 Posts
    • 11,253 Thanks
    zagfles
    I don't understand how he has lost out, was his employer taxing him on his gross (which was not reduced by his pension contributions), so also any additional income (interest, rent etc) would also not have benefited because his gross salary was not reduced.
    Originally posted by chucknorris
    If he was a higher rate taxpayer and he paid into a RAS scheme, then he's lost out on higher rate relief if he didn't declare it on his tax return.

    We have yet to establish if it was actually a RAS scheme, where conts are deducted after tax, or what HMRC confusingly refer to as a "net pay" scheme where conts are taken before tax thus giving full relief in the payslip.
    • enthusiasticsaver
    • By enthusiasticsaver 10th Jul 18, 10:57 AM
    • 6,696 Posts
    • 14,202 Thanks
    enthusiasticsaver
    As others have said it depends on how your pension payments were deducted. If on PAYE you would already get the HR tax relief so there may not be any claim to answer. If it is relief at source then I guess you will need to complete a self assessment form and go back as many years as possible.
    Debt free and mortgage free and early retiree. Living the dream

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    • chucknorris
    • By chucknorris 10th Jul 18, 11:03 AM
    • 9,629 Posts
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    chucknorris
    As others have said it depends on how your pension payments were deducted. If on PAYE you would already get the HR tax relief so there may not be any claim to answer. If it is relief at source then I guess you will need to complete a self assessment form and go back as many years as possible.
    Originally posted by enthusiasticsaver
    I see now, I didn't realise that he had not been filling in tax returns. You should have seen the look on my friend's face when I said to him 'But surely you must submit a tax return every year. Otherwise how are you telling the Inland Revenue about the additional interest on all those millions'?

    He worked full time, but had won about 6m gambling, but he had not been declaring the interest, which should have been taxed at 40%.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now mostly hike, gym classes and weight training (also a bit of cycling and swimming), less impact on my joints.
    • Triumph13
    • By Triumph13 10th Jul 18, 11:17 AM
    • 1,236 Posts
    • 1,553 Thanks
    Triumph13
    That used to be the case, but the post-tax salary route is now much more common, given how few occupational schemes (final salary or money purchase) are left.
    Originally posted by Dox
    I'm cleary getting old!
    I'm not doubting you, but does anyone have any figures on this? My impression was that most large employers still used the net pay method so it would be interesting to see which method was most common both in terms of number of schemes and number of members.
    • zagfles
    • By zagfles 10th Jul 18, 4:40 PM
    • 13,252 Posts
    • 11,253 Thanks
    zagfles
    I see now, I didn't realise that he had not been filling in tax returns.
    Originally posted by chucknorris
    He does do tax returns. He said so in his OP. But he hadn't been claiming tax relief on his pension conts. Whether he should have or not is what we're discussing!
    • Rodders2409
    • By Rodders2409 11th Jul 18, 2:33 PM
    • 50 Posts
    • 12 Thanks
    Rodders2409
    Many, many thanks & sorry for the delayed responses, as I'm working away and connectivity is a problem here.

    I'm obviously going to need to get out previous Pay Slips etc when I get home, and find out what was being paid / contributed before the switch to Sal Sac two years ago.

    I'll be back soon
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