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Posted Sat, 13 Nov 2021 14:21:48 GMT by James Richards
As a high rate tax payer for a £12k contribution to private pension would have to earn £20k before tax ie been taxed £8k to leave “spare” £12k for pension contribution. Contribute the £12k, provider claims 20% and adds £3k. On self assessment declare the £15k, hmrc calculate that an additional £3k tax relief is due (by raising my basic rate limit by £15k) I paid £8k tax and seem to get £6k tax relief. How do I get relief for the missing £2k.? I thought pension contributions were tax free as I will be paying tax on anything coming out? It seems the method of calculating the additional relief due through raising basic rate limit doesn’t work. Am I missing something?
Posted Tue, 16 Nov 2021 13:48:31 GMT by HMRC Admin 17

Hi,
 
It depends how the contributions work.

If you make contributions from your wage and they are not taken before tax is calculated, the pension provider will claim
20% relief and you claim the other 20% from HMRC.

The same is done for lump sum contributions.

If you contributed £12,000 from your net income, the £6,000 tax relief is correct.

Thank you.
Posted Tue, 16 Nov 2021 18:25:13 GMT by James Richards
That reply does not make sense, you say pension provider provides 20% and hmrc the other 20% but both 20% calculations assume basic rate tax payer. I paid 40% tax on £20k which is not the same as 20% of £15k and a further 20% from hmrc on £15k (which is effectively what happens when hmrc raise my basic tax limit by £15k. Simple question is, are contributions tax free or not…..if they are how do I get back my missing £2k?
Posted Wed, 17 Nov 2021 10:21:04 GMT by HMRC Admin 17

Hi,
 
Can you double check the amount that went into the pension and the relief, and contact our Self Assessment department to look at the return see link:

Self Assessment: general enquiries   .

Thank you.

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