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Posted Tue, 12 Sep 2023 21:48:59 GMT by sunhk2011
Hi, my private pension provider notified me that my pension contributions for 21/22 and 22/23 were greater than the standard annual allowance. Since my qualifying earnings for the two years were both less than the standard annual allowance, the pension provider confirmed they can refund me the amount of contributions in excess of my relevant UK earnings and refund the relevant tax relief to HMRC. My questions are: 1. Am I subject to any penalty or annual allowance charge for 21/22 and 22/23 even though the excess contributions and tax relief will be refunded during the 23/24 tax year? 2. If I do not pay income tax due to a low income, am I right that I will only receive tax relief £720 on the first £2,880 paid into my private pension, and anything above£2,880 will receive no relief? Does paying Class 2 NI count as “paying income tax”? 3. According to the HMRC guidelines, “if you pay income tax, you can get tax relief on private pension contributions worth up to 100% of your annual earnings.” Is my understanding correct that if, for example, during a tax year, I earn £14,000 and pay little income tax (say £100) and put £11,200 in my private pension, I will still get tax relief £2,800 (because £11,200 + £2,800 = £14,000 - 100% of my annual earnings)? Thank you.
Posted Wed, 20 Sep 2023 12:03:54 GMT by HMRC Admin 25
Hi sunhk2011,
1. When a pension provider agrees to pay an individual's annual allowance charge liability, no penalty or charge is incurred:
PTM056200 - Annual allowance: tax charge: telling HMRC                                                                                                                       
2. If you do not pay Income Tax, you still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you
(a) you do not pay Income Tax, for example because you’re on a low income
(b) your pension provider claims tax relief for you at a rate of 20% (relief at source). Paying NIC does not count as paying income tax.                  
3.  Yes, that is correct:
Tax on your private pension contributions       
Thank you.                                                                       

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