Pension advice

[anonymous-user]

A friend has gone into the 40% tax band and was hoping that their employee would dump some of their bonus into their private pension (a relatively small amount) so they could benefit from the 40% relief available to them and all before the April 5th tax window.

Unfortunately their employee has paid the money direct to their bank account in their wages instead.

Question is - Can they still pay a lump sum into their pension direct from their bank account and then claim back the 40% relief amount from the tax man?

[PurpleMoonlight]

Do you mean employer?

Yes an individual can make a personal contribution to a pension arrangement. It is paid net of basic rate tax relief (ie £80 on a gross £100) and the pension provider will reclaim the £20 from HMRC.

The higher rate tax relief (£20) is reclaimed via an annual tax return and paid to the individual by HMRC.

[JulianPH]

Yes, they can pay the net amount received into their bank account into a pension. The pension provider will claim back the basic rate of tax within the pension and your friend can claim back the higher rate of tax from HMRC directly.