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Posted Thu, 29 Dec 2022 22:14:41 GMT by Chris
I'm trying to understand the workings of how higher rate tax relief on pension contributions where tax relief at source in place. Assuming pension contributions of £6,000 paid after income tax at 40%, it took £10,000 gross to be paid £6,000 net after income tax. £6,000 is paid into the pension provider, they gross this up with basic tax relief at 20%, Which means an additional £1,500 is claimed back and added to pension fund. When you claim higher rate tax relief you get an additional 20%, which is another £1,500 £6,000 + £1,500 + £1,500 = £9,000 This is an effective 33% tax relief rather than 40%. Have I misunderstood this somewhere?
Posted Thu, 05 Jan 2023 12:19:22 GMT by HMRC Admin 32
Hi,

Please see below guidance

Tax on your private pension contributions

If you make a contribution and are unsure of the calculation please contact our Income Tax team.

Income Tax: general enquiries

Thank you.

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