Pension self-assessment issues

johnnyboy_808 · 13 January 2019 at 8:30PM

Hello
New to the UK, first year I need to do self-assessment, a bit daunting. My issue is that for 2017-18 i have contributed to my pension pot (including work pension and SIPP) in excess of the 40K limit (I contributed about 45K, as I didn't know the the tax relief had to be included in the calculation). I could take the unused contribution from the 2016-17 year (about 7K), which would be enough to cover the excess, however am not sure how to do this in the self-assessment, as there is nowhere to mention this. Also in 2016-17 I didn't do self-assessment as I was under PAYE, so I didn't specifically declare my SIPP contributions (though I imagine HMRC have a record). Do I declare the excess 5K contribution as liable, and then add in the free text at the end that I want to cover it with the previous year ? Or do I just not declare the excess as tax liable and trust that HMRC will figure it out ?

My other issue is that from my income I would be entitled to 40% tax relief. However when calculating my contributions towards the limits, I have only included the basic 20% relief in the calculation (which I received from the SIPP provider). If I calculated my contribution including the 40%, it would be too high over the limit to be able to cover it with the previous year. So I don't want to claim the 40% relief, however again I'm not seeing anywhere in the self-assessment where they would ask 'do you want to claim the 40%' or some way to opt out. Any idea what I should do ?
I'm especially wary of being considered in contravention of the tax rules, because as an immigrant any error on my taxes could be taken by the Home Office as a pretext to kick me out as an undesirable. so it's not just a matter of paying a bit more in taxes, my main concern is to not to be seen to be breaking any rule, no matter how puny.
thanks for any suggestions

Dazed_and_confused · 13 January 2019 at 8:47PM

Pension tax relief does not work in the way you outline in the second part of your post.

You do not get an "extra" 20%, the gross contribution (your payment and basic rate relief added by the pension company) is entered on your return and this increases the amount of basic rate tax you can pay. Which can in turn reduce how much higher rate tax is payable. That is how you get any additional relief due.

dunstonh · 13 January 2019 at 8:48PM

New to the UK, first year I need to do self-assessment, a bit daunting.

Self-assessment in the UK is generally not daunting. It is probably one of the easiest in the world for most people.

I could take the unused contribution from the 2016-17 year (about 7K), which would be enough to cover the excess, however am not sure how to do this in the self-assessment

You don't. Carry forward is not declared to HMRC. They have automated systems that flag up over payments after carry foward.

Also in 2016-17 I didn't do self-assessment as I was under PAYE, so I didn't specifically declare my SIPP contributions (though I imagine HMRC have a record). Do I declare the excess 5K contribution as liable, and then add in the free text at the end that I want to cover it with the previous year ? Or do I just not declare the excess as tax liable and trust that HMRC will figure it out ?

You only need to tell them your gross and net pension contributions in the tax year and state you are a higher rate taxpayer.

My other issue is that from my income I would be entitled to 40% tax relief. However when calculating my contributions towards the limits, I have only included the basic 20% relief in the calculation (which I received from the SIPP provider). If I calculated my contribution including the 40%, it would be too high over the limit to be able to cover it with the previous year. So I don't want to claim the 40% relief, however again I'm not seeing anywhere in the self-assessment where they would ask 'do you want to claim the 40%' or some way to opt out. Any idea what I should do ?

Pension contributions are treated gross. Not net. There has been an increase in recent times of the internet referring to contributions as net but that should be ignored and you should always look at pensions as the gross contribution. That is how HMRC view contributions.

You dont need to claim the extra 20% relief. The self-assessment form asks you the contributions. They take care of the rest from that information.

If the contributions were allowable under carry forward then its not an issue. If the contributions were not allowable then you take a tax hit. No laws broken as you can breach the annual allowance. You just dont get tax relief on it.

johnnyboy_808 · 26 January 2019 at 12:32PM

OK thanks for your explanations both.

Pension self-assessment issues

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