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Posted Sat, 21 Oct 2023 11:31:48 GMT by Kevinrv
WarningThis post is currently being moderated and will be visible when it has been approved by a HMRC moderator.
Posted Wed, 25 Oct 2023 11:52:42 GMT by HMRC Admin 10
Hi
That is correct.
Posted Wed, 25 Oct 2023 13:23:17 GMT by Kevinrv
Hi , my original post is still shown as pending moderator review! Would appreciate if this could be processed so I can share with my tax consultant as well
Posted Sun, 29 Oct 2023 10:42:23 GMT by Kevinrv
Hello , I have run this scenario through the HMRC Tax calculation summary notes (HMRC 12/22 SA110 Notes 2022-23) , the template which helps calculate tax due step by step. This document does not seem to align with the HMRC advice provided above. I feel it is because of the below 2 points : - tax due is calculated on “Total Taxable Income”(£131k) , and not on “Net Adjusted Income”(£124750) - Also , the calculation increases my basic rate limit by the one off pension contribution (£6250), to £43950 (in the document as S3 + A119). This does not make sense as the pension contribution should be tax free, but the calculation is taxing 20% on the amount paid into pension - isn’t this double taxing ? Based on the above, can we check if the document is correctly calculating tax, for this scenario of one-off pension contributions paid into work place pension ( from after-tax net pay ), from my bank. (Note: The £6250 includes the 20% topped up by pension provider)
Posted Tue, 31 Oct 2023 15:30:12 GMT by HMRC Admin 17


Hi, 
 
If your basic rate threshold was not extended by £6250, then your income at the higher rate would be £6250 more. 

Instead of paying tax at 40% on £6250 = £2500, your pension payment is taxed on £6250 at 20% = £1250. 

This means you are are only paying £1250 tax and not £2500, giving £1250 tax relief, to go with the £1250 tax paid that
the pension provider will claim. 

This gives a total tax relief of £2500, the equivalent of £3250 @ 40%. 

There is no double taxation arising in this calclation .

Thank you.
Posted Tue, 31 Oct 2023 22:18:04 GMT by Kevinrv
Thanks for your reply & explanation. So based on the above example , putting £5000 of post-tax net pay salary from bank, into pension got total £2500 tax relief. (£1250 via self assessment and £1250 claimed by pension provider) However £5000 pre-tax (@ 40%) would be (£5000x10/6) = £8333 gross. If I had paid £8333 via the ‘Net pay’ method into workplace pension , my pension would have gone up £8333 , and £0 tax on this amount . But because I had received this amount into bank , paying £5000 results in my pension going up by £6250, and get £1250 in self assessment relief, totalling to £7500, which is lesser than £8333. So that means I didn’t get 100% tax relief by paying into pension? (my assumption is that we get 100% relief for payments into pension)
Posted Thu, 02 Nov 2023 11:58:04 GMT by HMRC Admin 32
Hi,

You will still get full relief under net pay as this is taken from your pay before any tax is calcualted. As a higher rate taxpayer, this then reduces your amount of taxable income at the higher rate so means less tax is paid by you. You have still received the full relief.

Thank you.
Posted Thu, 02 Nov 2023 12:09:25 GMT by Kevinrv
Thanks , perhaps my question wasn’t clear. No doubt about the net pay relief. I was referring to the scenario where the salary was paid and then put back into workplace pension from bank. This is not getting the full relief >>> “But because I had received this amount into bank , paying £5000 results in my pension going up by £6250, and get £1250 in self assessment relief, totalling to £7500, which is lesser than £8333. So that means I didn’t get 100% tax relief by paying into pension? (my assumption is that we get 100% relief for payments into pension)”
Posted Thu, 02 Nov 2023 17:30:56 GMT by HMRC Admin 25
Hi Kevinrv,
Where you pay £5000 into your pension scheme, after your income has been taxed at 40%.
Your pension provider will claim 20% on the £5000 payment, which is £1250 (£6250 * 80/100 = £5000).
In your tax return, you are claiming the remainder of the tax relief, so you enter the gross figure paid so far £6250.
Your basic rate band will be extended by this amount so that £6250 is only taxed at 20% and not 40%, giving a further £1250 tax relief.
The difference is that you will only have paid £6250 into your pension scheme, with the other £1250 tax relief used to reduce your tax liability or repaid directly to you.
The other person has had to pay £8333 into their pension, to claim 40% tax relief.
Thank you. 
Posted Sun, 05 Nov 2023 20:46:34 GMT by Simon
Hi, I hope you mind me asking a related question. I too made a one-off pension contribution (from post-tax net pay salary) paid from my bank account but the issue I have is I do not know how or where to enter the added pension payment in my tax return. Can you tell me how that is done? Also do I need to provide any evidence of this in my tax return.g. confirmation letter from my workplace pension provider? I have calculated my net income in the 'Tailor your return section' and have answered 'no' to the 'Was your Adjusted Net Income over £50,000?' question as my one-off pension contribution took my below £50000. The calculation does not indicate that I have overpaid tax but this is not surprising as I do not know where to enter the one off pension contribution amount. I recall on the previous year's online tax return form there was a box to enter the one off pension contribution. Regards, Simon
Posted Thu, 09 Nov 2023 09:42:10 GMT by HMRC Admin 25
Hi Simon,
The one off payment to your pension scheme would be entered in box 1 of page TR4 of your Self Assessment tax return (SA100) which is for payments to a registered pension scheme, where basic rate tax will relief will be claimed by your pension provider.
Your pension provider will be able to confirm if they claimed 20% tax relief on your behalf.
Thank you. 

 
Posted Thu, 09 Nov 2023 20:27:42 GMT by Simon
Thanks, just to be clear, do I answer yes to the 'Did you make contributions towards a personal pension or retirement annuity?' question in the 'Tailor your return' section? I don't think the 20% tax relief has been claimed on my behalf as I don't see it on my pension statement. I will contact the pension provider to confirm though. If the tax relief hasn't been claimed do I add the one off payment amount to a different box on page TR 4?
Posted Fri, 10 Nov 2023 15:29:05 GMT by HMRC Admin 5
Hi Simon,

Yes, you answer that question and if no tax relief has already been applied, one of the new boxes that then open up has that option and you will put the amount in there.

Thank you

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