PAYE - Tax calculation

[TheAngryDog]

Hi all,

I've just received my tax breakdown for the year 2022-2023. I am trying to work out if I have paid too much tax. HMRC do not think I have overpaid, based on the information sent to them.

If I do a calculation via listentotaxman, without including my pension contributions, the tax figure matches what HMRC have. If I then include my pension contributions, the figure returned suggests a tax difference of approx £1000 in my favour.

Am I reading this correctly? I would greatly appreciate anyone's input who knows about these things, as I don't want to go raising a query with HMRC if there is nothing to raise.

Thanks.

[fat80b]

I'm not sure you've provided enough information here, but essentially what you are doing is what I also do.

I use the MSE calculator and enter the pension contributions as either sal sacrifice / after deduction amounts and it seems to be pretty accurate as calculators go.

Did you pay your pension as sal sacrifice (i.e. it was deducted before tax etc on your payslip) or is it a post tax contribution that you are seeking to recover the higher rate on?

[TheAngryDog]

I am pretty sure it's salary sacrifice, though I don't know for sure..

What I do know is that if I put zero pension contributions into the calculator, the tax adds up to what I have paid, with a higher monthly take home pay than what I take home now. If I put the pension contributions in then my monthly take home pay matches what I take home now, and my payable tax is less.

Tax is £9576 without adding pension contributions to calculator. Tax is £8468 with the pension contributions added.

Edited by TheAngryDog on Friday 7th July 00:05

[Rufus Stone]

If your pension contributions are under relief at source, and you are higher rate tax payer, you have to personally claim the higher rate tax relief on the pension contributions.

[fat80b]

You need to look at a payslip and it should explain how the pension contributions are made.

Based on the numbers, it seems unlikely that the pension contributions are salary sacrifice (as that decreases the gross before tax) and more likely that they are taken after tax and you need to claim the higher rate back.

Also - do you get any other benefits that would adjust the top line. Eg medical or a car allowance etc - they will move the top number ( but again seems unlikely to make it match what you are seeing exactly )

[TheAngryDog]

Rufus Stone said:

If your pension contributions are under relief at source, and you are higher rate tax payer, you have to personally claim the higher rate tax relief on the pension contributions.

Thanks - I did end up in the 40% bracket due to a bonus payment.

fat80b said:

You need to look at a payslip and it should explain how the pension contributions are made.

Based on the numbers, it seems unlikely that the pension contributions are salary sacrifice (as that decreases the gross before tax) and more likely that they are taken after tax and you need to claim the higher rate back.

Also - do you get any other benefits that would adjust the top line. Eg medical or a car allowance etc - they will move the top number ( but again seems unlikely to make it match what you are seeing exactly )

It just says pension (inc avc). Checking my pension contributions online it shows that the provider claims my tax relief. In the month that I received my bonus, my pension contribution was the same as it always is.
I am in receipt of a taxable medical benefit which I was issued a P11D for.

Do I need to call HMRC to discuss claiming my tax relief back now?

Thanks guys.

[fat80b]

TheAngryDog said:

It just says pension (inc avc). Checking my pension contributions online it shows that the provider claims my tax relief. In the month that I received my bonus, my pension contribution was the same as it always is.
I am in receipt of a taxable medical benefit which I was issued a P11D for.

Do I need to call HMRC to discuss claiming my tax relief back now?

Thanks guys.

OK so that is not salary sacrifice then, and if you have gone over the 40% bracket - you need to claim back the additional tax. You can do this by phoning them but phoning HMRC is tricky at the moment because the lazy sods have shut the phone line for the summer.....

I would do a Self Assesment tax return to get every penny back. To do this, you need to register for self assesment and fill in the form which seems daunting but is actually straight forward once you have the numbers.

You'll need your P60, your P11D, and your total pension contribution for the year (get this from logging in to the pension providers website and comparing it to your payslips). The pension number gets entered with the 20% added on to it - i.e. If you have paid in 10K, then you enter £12K on the SA form. (I know - daft isn't it).

You might also be able to claim work from home amounts if you work from home regularly, which isn't much but it's your money not theirs. But you'll have to enter the benefits off the P11D which will push the gross up.

You can then fill it in and it should work it out for you and you should end up getting your 1K back in a few weeks.

[TheAngryDog]

fat80b said:

OK so that is not salary sacrifice then, and if you have gone over the 40% bracket - you need to claim back the additional tax. You can do this by phoning them but phoning HMRC is tricky at the moment because the lazy sods have shut the phone line for the summer.....

I would do a Self Assesment tax return to get every penny back. To do this, you need to register for self assesment and fill in the form which seems daunting but is actually straight forward once you have the numbers.

You'll need your P60, your P11D, and your total pension contribution for the year (get this from logging in to the pension providers website and comparing it to your payslips). The pension number gets entered with the 20% added on to it - i.e. If you have paid in 10K, then you enter £12K on the SA form. (I know - daft isn't it).

You might also be able to claim work from home amounts if you work from home regularly, which isn't much but it's your money not theirs. But you'll have to enter the benefits off the P11D which will push the gross up.

You can then fill it in and it should work it out for you and you should end up getting your 1K back in a few weeks.

Thank you for explaining this, it is much appreciated. I will get registered for SA.

I have paid in £2,028.21 minus the relief, so I would put this figure in as £2433.85?

Thanks.

[TheAngryDog]

I have received my P11D which includes £643 of medical benefit on it so my tax code has changed for next year. I will still look at doing the tax return as I still believe I was over tax as a result of receiving my bonus. I lost almost half of it to tax.

[fat80b]

TheAngryDog said:

I have received my P11D which includes £643 of medical benefit on it so my tax code has changed for next year.

That sounds right but worth checking - I always login to the gov gateway site and enter my estimate of earnings for the year to make sure the tax code is correct.

TheAngryDog said:

I will still look at doing the tax return as I still believe I was over tax as a result of receiving my bonus. I lost almost half of it to tax.

About half is probably right as well if you are a 40% tax payer when you add NI in as well.

It can make sense to pay the bonus into a pension if you have no immediate need for it and would rather not pay the tax

[TheAngryDog]

fat80b said:

TheAngryDog said:

I have received my P11D which includes £643 of medical benefit on it so my tax code has changed for next year.

That sounds right but worth checking - I always login to the gov gateway site and enter my estimate of earnings for the year to make sure the tax code is correct.

TheAngryDog said:

I will still look at doing the tax return as I still believe I was over tax as a result of receiving my bonus. I lost almost half of it to tax.

About half is probably right as well if you are a 40% tax payer when you add NI in as well.

It can make sense to pay the bonus into a pension if you have no immediate need for it and would rather not pay the tax

I may do that next year with my bonus should I receive one.

Re the 40% tax, I only paid it for one month by the looks of it, when I received my bonus, the rest of the year I paid 20% tax.