Claiming 40% tax relief on pension contributions

[3xAAA]

Hi guys,
I try and salary sacrifice all of my earnings in the 40% tax bracket into my pension, unfortunately, this is difficult because I get 6-7 bonuses a year which means I’m never entirely sure what I will be earning.

On the HMRC gateway portal, it looks like I was in the 40% bracket for the tax year 2020/2021, if I’ve understood correctly, I should be able to make a manual payment to my pension provider, and then claim back the 40% tax from HMRC?

According to this calculator, the figures look like this: https://www.hl.co.uk/pensions/tax-relief/calculato...



I can make a payment of £3,244.76 to Scottish Widows easy enough, and they'll automatically add 20%, but how to claim the other 20% from HMRC? I don't do a self-assessment, and the GOV website just says "contact HMRC", is it as simple as calling them up and asking for a cheque?

[bogie]

If you dont self assess then yes you just call them up and tell them the total gross pension payments for the year and they issue a rebate.

[oop north]

You have to make the contribution before the end of the tax year. So it’s too late for 2020-21

[Kwackersaki]

bogie said:

If you dont self assess then yes you just call them up and tell them the total gross pension payments for the year and they issue a rebate.

When I did this couple of years ago, I had to send a signed letter with evidence of my pensions payments so may have changed.

[3xAAA]

anonymous said:

[redacted]

Well this is confusing

I was watching a YouTube video earlier that said you could go back 4 years, and you can only claim back the 40% rate AFTER the financial year. Then I spoke to a mate earlier who said he claims it, but you have to do it that tax year otherwise you lose the 40% relief.

Maybe if I call them in the morning I will get an answer!

[PorkInsider]

anonymous said:

[redacted]

You can definitely claim it for past years - I've recently claimed for a couple of years I'd missed and received a cheque from HMRC.

However... I've also known them to completely balls up refunding the additional rate tax via tax codes - they once changed my code to one which would have got me back on track by the end of the tax year, but then inexplicably changed it again a couple of months later and ended up owing me more than they did to begin with. They gave up and sent me a cheque that time too.

[Crumpet]

anonymous said:

[redacted]

I believe you can do salary sacrifice and get your salary below the threshold so you can claim child benefit, but if you manually make those contributions can you do the same?

So if you earn £90k a year and sacrifice the maximum (through the work scheme) £40k into the pension your salary is then £50k and you can claim child benefit.

But if you earn £90k and manually make that £40k payment into the pension does that still make you eligible for child benefit?

[PorkInsider]

anonymous said:

[redacted]

Yes, because what matters is the net position you find yourself in.

You don't 'lose' CB as such - if you choose to continue claiming it when you're over the threshold you would declare it on your tax return and potentially pay some or all of it back.

You would also declare the pension contributions on the return, so they are considered together.

[Crumpet]

PorkInsider said:

Yes, because what matters is the net position you find yourself in.

You don't 'lose' CB as such - if you choose to continue claiming it when you're over the threshold you would declare it on your tax return and potentially pay some or all of it back.

You would also declare the pension contributions on the return, so they are considered together.

Ah right, thanks for clarifying. Think I’ll be needing a long conversation with HMRC at some point….

So annoying that one person on £100k can’t receive child benefit but two people on £50k can. What a joke!

[Dimebars]

How does this work with employer pensions?

I have an Aviva pension that both I and my employer contribute to monthly. I am a 40% taxpayer, but have no idea whether I am due any relief or not!

Bit of a thread hijack, I know, but any pointers on where to start investigating?

[VR99]

Dimebars said:

How does this work with employer pensions?

I have an Aviva pension that both I and my employer contribute to monthly. I am a 40% taxpayer, but have no idea whether I am due any relief or not!

Bit of a thread hijack, I know, but any pointers on where to start investigating?

I would check with your pension provider directly on the type of pension they offer,for example my employer uses Standard Life and clearly states it's a 'salary sacrifice' scheme (I think this falls under 'net pay' type pensions). If yours is also a salary sacrifice then I don't *think* there is any additional relief to claim, the employee 'sacrifices' a % of gross salary (before tax) and therefore no tax is paid on the amount sacrificed. For this tax year I am aiming to sacrifice down to 50k or just under hence avoiding any 40% tax and not getting whacked with tax on child benefit.

If on the other hand you have a 'relief at source' pension, then I think your employer claims the tax relief from HMRC but I could be talking utter rubbish so il let the someone else confirm as not too sure.

[Dimebars]

Thanks VR99. It's not salary sacrifice, I know that much.

Will speak to payroll and see what they say!

[Abdul Abulbul Amir]

Dimebars said:

Thanks VR99. It's not salary sacrifice, I know that much.

Will speak to payroll and see what they say!

They probably won't know.

Check your payslip and look at the taxable pay amount. If this is 1/12 of your annual salary it isn't salary sacrifice and you need to do a claim on your self-assessment.

[Abdul Abulbul Amir]

anonymous said:

[redacted]

[Muzzer79]

Dimebars said:

How does this work with employer pensions?

I have an Aviva pension that both I and my employer contribute to monthly. I am a 40% taxpayer, but have no idea whether I am due any relief or not!

Bit of a thread hijack, I know, but any pointers on where to start investigating?

I have an Aviva pension and have done exactly this - 'this' being claim 20% tax relief back.

You need to check with your pension provider as stated and see at which point your pension is deducted. If it is before salary, you are not due any relief. If it is deducted after, you may be able to claim the 'other' 20% in relief.

If you are, this can be done via self-assessment - it's reasonably straightforward.

[CornishRob]

Thanks to this thread, i rang up HMRC and have 1500 squid on its way

[WayOutWest]

Dimebars said:

Thanks VR99. It's not salary sacrifice, I know that much.

Will speak to payroll and see what they say!

As mentioned above you can ring up HMRC and get them to adjust your tax code so your take home pay increases to compensate.
If lucky this needn't be a terribly painful conversation, but please give yourself about 45 minutes and be prepared to be on hold for a while.
Less hassle than filling in a tax return I guess.

Your company payroll or HR staff will probably have more of a clue about what is going on with Love Island or what the Kardashians are up to.
Anyway, HMRC will write to your employer to give them the new tax code, not vice versa.

Edited by WayOutWest on Monday 10th January 16:12

[Crumpet]

Abdul Abulbul Amir said:

You can bring forward any unused allowance fot the prior 3 years* into the current year but you can't make pension payments into prior years. So too late for 20/21.

eta

• for any years you had a qualifying pension plan in place.

Edited by Abdul Abulbul Amir on Monday 10th January 12:56

Isn’t that one and the same? So if I’d put £20k in the pension in 19/20 and £20k in 20/21 I can now put £80k in for 21/22?

Or would the relief only be on the tax paid in 21/22? So basically if I earned £90k I’d basically pay no tax in the 21/22 year and couldn’t claim the 40% relief in the previous years?

[Abdul Abulbul Amir]

Crumpet said:

Abdul Abulbul Amir said:

You can bring forward any unused allowance fot the prior 3 years* into the current year but you can't make pension payments into prior years. So too late for 20/21.

eta

• for any years you had a qualifying pension plan in place.

Edited by Abdul Abulbul Amir on Monday 10th January 12:56

Isn’t that one and the same? So if I’d put £20k in the pension in 19/20 and £20k in 20/21 I can now put £80k in for 21/22?

Or would the relief only be on the tax paid in 21/22? So basically if I earned £90k I’d basically pay no tax in the 21/22 year and couldn’t claim the 40% relief in the previous years?

You can only use the carry forwards to offset income in the current year. And you uses unused allowances from the most recent years first.

[3xAAA]

Abdul Abulbul Amir said:

Crumpet said:

Abdul Abulbul Amir said:

You can bring forward any unused allowance fot the prior 3 years* into the current year but you can't make pension payments into prior years. So too late for 20/21.

eta

• for any years you had a qualifying pension plan in place.

Edited by Abdul Abulbul Amir on Monday 10th January 12:56

Isn’t that one and the same? So if I’d put £20k in the pension in 19/20 and £20k in 20/21 I can now put £80k in for 21/22?

Or would the relief only be on the tax paid in 21/22? So basically if I earned £90k I’d basically pay no tax in the 21/22 year and couldn’t claim the 40% relief in the previous years?

You can only use the carry forwards to offset income in the current year. And you uses unused allowances from the most recent years first.

When I receive my last paycheque of the financial year, at the end of March, I'll have earned roughly £56k.

Are you saying at that point I have until the 5th April to make the manual contribution to my pension provider and claim the 20% back from HMRC?