SIPP - Higher rate tax relief - HMRC help
Discussion
Hello
Not sure where to start here. I have a SIPP. Lets say to keep the maths simple I paid in 10000 last tax year. The SIPP provider added in 2500. So I now have 12500 in my SIPP. I am led to believe that as I am a higher rate tax payer for the equivalent of that 10000 and more then HMRC should pay me back another 2500. I have jumped through various hoops with HMRC providing them with information but they tell me they will only pay me 2000. I have called to discuss this with my SIPP provider who say they can not really comment or get involved. But I am saying that their illustrations or examples on their website do not match what HMRC are telling me. So either the SIPP provider's example calculations are incorrect or what HMRC are telling me is incorrect.
Here are a couple of SIPP providers who have an illustration on their website. Both of these seem to show that the money they top up should match the amount from HMRC. But this is not what I am getting out of HMRC.
https://www.youinvest.co.uk/sipp/tax-benefits-sipp
https://www.hl.co.uk/pensions/tax-relief
Not sure where to start here. I have a SIPP. Lets say to keep the maths simple I paid in 10000 last tax year. The SIPP provider added in 2500. So I now have 12500 in my SIPP. I am led to believe that as I am a higher rate tax payer for the equivalent of that 10000 and more then HMRC should pay me back another 2500. I have jumped through various hoops with HMRC providing them with information but they tell me they will only pay me 2000. I have called to discuss this with my SIPP provider who say they can not really comment or get involved. But I am saying that their illustrations or examples on their website do not match what HMRC are telling me. So either the SIPP provider's example calculations are incorrect or what HMRC are telling me is incorrect.
Here are a couple of SIPP providers who have an illustration on their website. Both of these seem to show that the money they top up should match the amount from HMRC. But this is not what I am getting out of HMRC.
https://www.youinvest.co.uk/sipp/tax-benefits-sipp
https://www.hl.co.uk/pensions/tax-relief
Double check your communication with HMRC, every time I give them figures they ask for the gross contribution (inc the tax relief the SIPP provider claims back for you) so as per the post above, you tell HMRC you paid in £12.5k gross
You could get a tax rebate or they may adjust your tax code ongoing to give you the relief in your pay each month. Check if you have had any coding notices of tax code changes, perhaps they made a mistake or you didnt tell them you wanted a rebate immediately...
You could get a tax rebate or they may adjust your tax code ongoing to give you the relief in your pay each month. Check if you have had any coding notices of tax code changes, perhaps they made a mistake or you didnt tell them you wanted a rebate immediately...
The question is, did you put in £10,000 net, or £10,000 after basic rate tax relief?
From the answer you received from HMRC it seems you put is £8,000 net which was grossed up by your SIPP provider to £10,000. This means you are only entitled to a further £2,000 back in higher rate tax relief.
If you did indeed put in £10,000 net your provider would have reclaimed £2,500 in basic rate relief and you can reclaim a further £2,500 back from HMRC -providing The whole contribution was subject to the higher rate of tax (i.e. you cannot reclaim the higher rate relief on any part of a pension contribution that wasn't taxed at the higher rate.
I hope that helps.
From the answer you received from HMRC it seems you put is £8,000 net which was grossed up by your SIPP provider to £10,000. This means you are only entitled to a further £2,000 back in higher rate tax relief.
If you did indeed put in £10,000 net your provider would have reclaimed £2,500 in basic rate relief and you can reclaim a further £2,500 back from HMRC -providing The whole contribution was subject to the higher rate of tax (i.e. you cannot reclaim the higher rate relief on any part of a pension contribution that wasn't taxed at the higher rate.
I hope that helps.
ATM said:
Thanks
I paid in the money net as it was received from my salary which is PAYE.
I paid in 10 and the sipp provider increased this by 2500 so my sipp shows a balance of 12500.
10 from me
2500 in tax relief
HMRC say they are sending me 2000 when I believe they should be sending me 2500.
If all of the contribution was at the higher rate then you should be getting £2,500 back from HMRC then.I paid in the money net as it was received from my salary which is PAYE.
I paid in 10 and the sipp provider increased this by 2500 so my sipp shows a balance of 12500.
10 from me
2500 in tax relief
HMRC say they are sending me 2000 when I believe they should be sending me 2500.
If you need any help with this just give me a shout, but your accountant should be able to do it very easily on your tax return, showing you made a £10k net contribution.
Cheers
JulianPH said:
ATM said:
Thanks
I paid in the money net as it was received from my salary which is PAYE.
I paid in 10 and the sipp provider increased this by 2500 so my sipp shows a balance of 12500.
10 from me
2500 in tax relief
HMRC say they are sending me 2000 when I believe they should be sending me 2500.
If all of the contribution was at the higher rate then you should be getting £2,500 back from HMRC then.I paid in the money net as it was received from my salary which is PAYE.
I paid in 10 and the sipp provider increased this by 2500 so my sipp shows a balance of 12500.
10 from me
2500 in tax relief
HMRC say they are sending me 2000 when I believe they should be sending me 2500.
If you need any help with this just give me a shout, but your accountant should be able to do it very easily on your tax return, showing you made a £10k net contribution.
Cheers
No tax return
Just called HMRC and asked for the money
JulianPH said:
She has it wrong then, which is not a surprise with HMRC!
You need to make it clear that your £10k contribution was from net cash (it wasn't clear with your OP).
Just give me a shout if I can help.
Completely agree with this, the lady has misunderstood you, or you gave the wrong figure to her.. You have made a gross contribution of £12,500 ( the figure to tell her) , therefore you are due £2,500 from the HRMC, on the assumption all of this is within 40% tax paid income.You need to make it clear that your £10k contribution was from net cash (it wasn't clear with your OP).
Just give me a shout if I can help.
WhiskyDisco said:
For many years I was paying £240 a month into a pension, and this was being topped up by £60 to £300. The calculation on this is £300 * 0.80 = £240. If I were a higher rate taxpayer I could have claimed an additional £60 a month.
Correct - assuming all of that income is in the 40% band
I had trouble understanding this at first. Using our 10 grand example you need to not use 15 grand in your maths. Let me explain.
You put 10000 into your sipp. The sipp people top this up by 2500. You now have 12500 in your sipp. OK fine everyone understands this.
Now you call HMRC for your rebate. They - should - give you back 2500. This means you now have 12500 in your sipp but it only cost you 7500. You put in 10000 originally and then you got 2500 back. So you are only 7500 down and the sipp has 12500 in it.
So you are effectively saying you earned 12500 before tax at 40% which results in you actually receiving 7500. And now you have 12500 in your sipp and you have paid out 7500.
Thats how it adds up.
You put 10000 into your sipp. The sipp people top this up by 2500. You now have 12500 in your sipp. OK fine everyone understands this.
Now you call HMRC for your rebate. They - should - give you back 2500. This means you now have 12500 in your sipp but it only cost you 7500. You put in 10000 originally and then you got 2500 back. So you are only 7500 down and the sipp has 12500 in it.
So you are effectively saying you earned 12500 before tax at 40% which results in you actually receiving 7500. And now you have 12500 in your sipp and you have paid out 7500.
Thats how it adds up.
ATM said:
I had trouble understanding this at first. Using our 10 grand example you need to not use 15 grand in your maths. Let me explain.
You put 10000 into your sipp. The sipp people top this up by 2500. You now have 12500 in your sipp. OK fine everyone understands this.
Now you call HMRC for your rebate. They - should - give you back 2500. This means you now have 12500 in your sipp but it only cost you 7500. You put in 10000 originally and then you got 2500 back. So you are only 7500 down and the sipp has 12500 in it.
So you are effectively saying you earned 12500 before tax at 40% which results in you actually receiving 7500. And now you have 12500 in your sipp and you have paid out 7500.
Thats how it adds up.
IndeedYou put 10000 into your sipp. The sipp people top this up by 2500. You now have 12500 in your sipp. OK fine everyone understands this.
Now you call HMRC for your rebate. They - should - give you back 2500. This means you now have 12500 in your sipp but it only cost you 7500. You put in 10000 originally and then you got 2500 back. So you are only 7500 down and the sipp has 12500 in it.
So you are effectively saying you earned 12500 before tax at 40% which results in you actually receiving 7500. And now you have 12500 in your sipp and you have paid out 7500.
Thats how it adds up.
Just checked the HMRC app on my phone and this is already showing. From the app I can then complete my bank details and request the payment. Its not what I would call a good app in this day and age but considering this is the HMRC it is well worth having. I recommend it to anyone and everyone.
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