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Posted Wed, 13 Nov 2024 13:30:47 GMT by Antonio Albano
I pay into a personal pension. The pension provider claims the 20% basic rate and I show the total payments on my tax return in order to claim the additional 20% as I am a 40% tax payer. I also have rental income. The approximate amount I pay into my pension is also included in my tax code. As a result, I pay a lower amount of 40% tax from pay. When I complete my tax return, my 20% threshold is increased by the amount of pension payments. As such, I then pay 40% on a lower amount of income/profit. What is the purpose of including the pension payments in my tax coding? I initially get 40% relief (via my pay) and then pay 20% less tax via my SA calculation, as above. And this is before the 20% claimed by the pension provider. It seems I'm getting too much relief. Can someone please explain the calculation? Am I fundamentally misunderstanding this? Can I ask for the pension payments NOT to be included in my tax code? Thanks
Posted Fri, 15 Nov 2024 11:24:56 GMT by HMRC Admin 21 Response
Hi,
If you claim personal pension relief on your tax return and not a one off payment then if you have a PAYE source of income then your tax code is amended to include the pension relief going forward. The pension relief would only be removed from your tax code if you were no longer entitled to the relief.
Thank you.
Posted Fri, 15 Nov 2024 11:36:02 GMT by Antonio Albano
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