Pension contribution to trust-based pension scheme

I made a contribution to my former employer's pension scheme for FY23-24 (I changed jobs in July 2023). The pension provider does not claim basic tax relief for trust based pension schemes (of which my former employer's scheme is one) so I need to reclaim this from HMRC on my SATR. Based on the HMRC guidance notes at SA150, box 1 assumes that basic tax relief is claimed by the pension provider and box 4 is for overseas pensions. Therefore, the only sensible boxes to fill in are box 2 (for payments to a retirement annuity contract where basic rate tax relief will not be claimed by the provider) or box 3 (payments to my employer's scheme for which no tax relief was given at source). I am an additional rate taxpayer and the pension contribution straddles the 45% and 40% bracket. The tapering does not apply so I have the full £60,000 of annual limit available to be used (plus any unused limit for the past 3 years). I have a couple of questions in relation to the above: 1) Do boxes 2 and 3 give the same amount of tax relief and if so does it matter which box I fill in (as technically none of them is a perfect fit) as long as I explain what I've done in the notes? 2) Do I show the net or gross amount of tax relief in the box? If gross, do I gross up for 45% (up to the amount of tax I paid at 45%) and the balance at 40%? 3) What is the amount of contribution that counts towards my annual limit? Net/grossed up at 45% and 40% as per 2 above/grossed up at 20%? 4) Do I need to do anything to reclaim my personal allowance as the pension contribution takes my adjusted net income below £125,140? I assume additional relief for PA is automatic but please confirm. Thank you

In question 2 - I meant to say the net or gross amount of the PENSION CONTRIBUTION (not tax relief). Any comments from HMRC are gratefully received

Being a corporation tax professional myself, I must admit it took me a while to get my head around the mechanics of income tax relief in this case. For what it's worth, I have pulled together a spreadsheet showing tax calcs for three different scenarios (net pay, relief at source and no relief at source). Hopefully, it would save time to folks in the future. Assumptions: Total income (prior to pension relief) 135,000 Gross contribution under net pay or claim method 35,000 Equivalent net contribution under relief at source (RAS) 28,000 (ie the contribution under RAS is assumed to be lower that for other two scenarios for comparability purposes) Basic tax relief under RAS (claimed by provider) 7,000 SCENARIO 1. Salary sacrifice (net pay) - s193 FA04 Total taxable pay (net income) is 100,000 as the contribution reduces net income (s193(2) FA2004) Upper limit Income Rate Tax Personal allowance 12,570 12,570 0% - Basic rate band 50,270 37,700 20% 7,540 Higher rate band 125,140 49,730 40% 19,892 Additional rate band N/A - 45% - TOTAL 100,000 27,432 Take-home pay + pension fund (ignoring NIC) 107,568 There is nothing additional to include in SATR as all of the tax relief has been given through salary sacrifice (s193(8) FA04). SCENARIO 2. Relief at source - s192 FA04 Total taxable pay (net income) is 135,000 as the contribution (grossed up by 20%) increases the basic rate and higher rate limits (s10(6)(b) ITA07 and s192(4) FA04) and also reduces "adjusted net income" (s58 ITA07) to £100,000, such that personal allowance (s35 ITA07) is fully reclaimed. The grossed up amount of contribution (C x 1.25) ie 28,000 x 1.25 = 35,000 should be included in box 1 (payments to PPRs where basic tax relief claimed by provider). Upper limit Income Rate Tax Personal allowance 12,570 12,570 0% - Basic rate band 85,270 72,700 20% 14,540 Higher rate band 160,140 49,730 40% 19,892 Additional rate band N/A - 45% - TOTAL 135,000 34,432 Take-home pay + pension fund (ignoring NIC) 107,568 SCENARIO 3. Relief on making a claim - s194 FA04 Total taxable pay (net income) is 100,000 as the contribution reduces net income ("Step 2" in s23 ITA07, s24(1)(a) ITA07). The actual amount of the contribution (ie no gross up for tax) should be included in box 2 (payments to RAR where no basic tax relief claimed by provider). Upper limit Income Rate Tax Personal allowance 12,570 12,570 0% - Basic rate band 50,270 37,700 20% 7,540 Higher rate band 125,140 49,730 40% 19,892 Additional rate band N/A - 45% - TOTAL 100,000 27,432 Take-home pay + pension fund (ignoring NIC) 107,568 As one can see, the three scenarios result in the same amount of home-take pay and pension pot increase. The higher amount of tax paid in scenario 2 is offset by the lower amount of the cash pension contribution (ie effectively HMRC just passes on the additional tax to the pension provider). HMRC could have made this easier for us surely!

Hi takozh83,
As no tax relief has already been applied you will show the payment as retirement annuity and the payment you have made is the gross payment.
This will then given the relief due in the calculation.
Any changes to the personal allowance will be done automatically.
Thank you. 

Appreciate the response and confirmation @HMRC Admin 25. I assume it would not be possible to ask my current employer to refund the excess Class 1A NIC contributions as the payment is outside the salary sacrifice arrangement. Correct?

Hi takozh83,
You are correct.
Thank you.