Self assessment 40% tax PAYE employee

[StanleyT]

I think someone at work is spreading misinfo, or perhaps is relaying info which is no relevant to all of us (whilst mostly a "staff" business we have lots of legacy T&Cs from different companies merging and different payroll depts managing different groups on different T&Cs) but I just wanted to check.

Said person, let's call him Mark as that is his name, has done his tax return and his FA has told him as he is a 40% taxpayer he can claim 20% additional tax relief through his tax return, and for a number of previous years. So over the last few months, quite a few people have followed his advice and done this on their tax returns and got some nice rebates from HMRC / reductions in tax bill.

Mark was trying to persuade me to do it after he heard me moaning about HMRC hitting me for CB refunds every year. I said I didn't think I was eligible as for example say my salary is £100k, my pension contributions to my work pension are £10k then my gross taxable salary is £90k, which is what it shows on my P60 and what work submit to HMRC via real time taxation and what my tax return is based on, so I've already got my "40%" rebate by not paying tax on the £10k as that isn't in my gross income.

Mark says he is treated exactly the same way by Payoll and he can claim an extra £2k of his £10k through his tax return!

No other income that is taxable apart from this PAYE income.

Is he correct or has h been given bad advice (which he has given to others) and one day HMRC will catch up with him?

[CharlesElliott]

I can't comprehend what he is talking about. If your income is from employment, you fill out your income, tax paid, benefits in kind.....and that's about it. The return calculates whether you've paid enough tax through PAYE. What and how is being 'reclaimed'?

[CharlesElliott]

OK, you are talking about pension contributions.

As your pensions contributions are deducted before tax, you are already tax relief on them. You can't claim more.

[Sheepshanks]

CharlesElliott said:

You can't claim more.

Well you can, and it'll be paid pretty well automatically. Whether anyone at HMRC will notice or not is another matter.

[rsbmw]

Many people, myself included, only get 20% tax relief at source on pension contributions and so have to moan at HMRC (or do self assessment) to claim the rest. This seems to be what he's talking about. Are you sure you're receiving the full 40% relief at source?

[Ollerton57]

As above.

I think the confusion might be coming from discretionary pension contributions. For example I contribute to a HL SIPP and they will automatically apply a rebate at basic rate i.e. 20%. I have to claim the rest.

Any pension contribution as salary sacrifice already has full tax relief.

[JamesD74]

rsbmw said:

Many people, myself included, only get 20% tax relief at source on pension contributions and so have to moan at HMRC (or do self assessment) to claim the rest. This seems to be what he's talking about. Are you sure you're receiving the full 40% relief at source?

This.

I also get 20% at source and complete my SA to sort out the rest + CB.

[StanleyT]

rsbmw said:

Many people, myself included, only get 20% tax relief at source on pension contributions and so have to moan at HMRC (or do self assessment) to claim the rest. This seems to be what he's talking about. Are you sure you're receiving the full 40% relief at source?

Pretty sure I do, e.g. my payslip says (numbers for example)
£100k salary
£10k pension contribution
£90k gross pay
£91k nett taxable pay (I get 1K BIK)
£90k nett niable pay

Take home £60k

Edited by StanleyT on Tuesday 7th January 14:29

[LeighW]

StanleyT said:

rsbmw said:

Many people, myself included, only get 20% tax relief at source on pension contributions and so have to moan at HMRC (or do self assessment) to claim the rest. This seems to be what he's talking about. Are you sure you're receiving the full 40% relief at source?

Pretty sure I do, e.g. my payslip says (numbers for example)
£100k salary
£10k pension contribution
£90k gross pay
£91k nett taxable pay (I get 1K BIK)
£90k nett niable pay

Take home £60k

Edited by StanleyT on Tuesday 7th January 14:29

You are getting full tax relief at source. If the situation's the same for Mark, he's over claiming.

[CharlesElliott]

Thanks to the people that pointed out the nuances of where my blanket statement is wrong....but in my reading of the OPs situation, he is receiving tax relief at source through salary sacrifice and has what he is entitled to.

But tax is a complex thing!

[AndyAudi]

FYI
If you give to charity via gift aid in any sizeable level you can claim back the additional tax there too!

[Starfighter]

also, professional membership fees etc are tax deductible and can be netted off via the tax coding for PAYE or via self assessment.

[StanleyT]

Thanks for all the replies, especially all the ones about how to lower your PAYE tax code - which unfortunately I knew most of.

But singly, re the pension issue, if paid like I detailed above, there is no further money due to be claimed from HMRC via self assessment with respect to the pension as it has been fully accounted for in the working out of the gross salary by payroll?

I have a feeling the guy next to me, (Geoff) who has just got his £4k+ cheque rebate for the last couple of years through might be a bit disappointed then as he is definitely paid the same way as me - he showed me the full workings on his HMRC SA page one lunch, as "advised" by Mark.

I presume for Geoff (we'll call him Geoff as it would embarass Rob if I named him) he has two options, 1) name Mark as his advisor on his tax returns or 2) ring HMRC before cashing the cheque to confirm if the advice was right or not.

[LeighW]

StanleyT said:

I presume for Geoff (we'll call him Geoff as it would embarass Rob if I named him) he has two options, 1) name Mark as his advisor on his tax returns or 2) ring HMRC before cashing the cheque to confirm if the advice was right or not.

Rob Geoff should take option 2, as the buck stops with him anyway.

[JBM78]

For some Workplace pension schemes (including most NEST pensions I think), the employee contribution is deducted after tax. So the pension contribution reduces your net pay, but does NOT reduce the tax payable. In this case, the Government will add basic rate tax relief into the pension scheme, and any higher rate tax relief needs to be obtained through self-assessment.

Easiest way to find out is to check your pension statement, which will show tax relief being added in addition to the employee contribution, if the pension deduction is made post-tax.

[CharlesElliott]

I would advise them all to look at this: https://www.gov.uk/government/publications/hmrc-yo...