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  • RE: Tax Relief on Pension Contributions at Higher Rate

    Hi Adam, The two £20 are not the same as one is within the pension and the second, which you claim from HMRC, is a rebate into your bank account ie basically an adjustment to your tax/net pay. In the example, £133.33 gross pay becomes £80 after tax. Then after the relief at source and tax rebate you end up with £100 in your pension and £20 in your pocket. If you did salary sacrifice, then instead of gross pay of £133.33, you would sacrifice £100. This goes straight into your pension, no relief at source added. Gross pay is now actually £33.33, taxed at 40% becomes net pay of £20. So once again you end up with £100 in the pension and £20 in your pocket. Rgds, Philip
  • Claiming pension tax relief for previous tax years

    Hello, I have just realised that my workplace pension works on a 'Relief at source' basis. As a higher rate tax payer I should have claimed the extra tax relief in my self assessments but did not realise I had to do this at the time. How can I claim the tax relief for pension contributions for previous tax years? I can't see where on the self assessment form I should do this? Please note I am not talking about carrying forward unused annual allowance. Kind regards,
  • RE: Tax Relief on Pension Contributions at Higher Rate

    Hi Adam, I am not part of HMRC but think I understand where you are coming from. However the mistake you are making is that only £100 (the amount ending up in your pension including relief at source) should be 'tax-free', and the remaining £33.33 will be taxed at 40% which leaves you with £20 (the amount HMRC rebate to you). £133.33 was taken from your gross pay. £100 (£80 + £20) is the pension contribution. £33.33 remainder is taxed along with the rest of your income ie at 40%. Net of 40% tax this leaves £20, which is precisely the amount HMRC refund to you. If you had wanted to contribute £133.33 in total to the pension you would have had to pay £106.66 out of your net pay. Rgds,
  • Exchange rate for foreign currency earnings

    Hello, Could you advise on the following situation: Employee with basic salary paid in GBP but bonus paid in USD; what exchange rate to use to convert the earnings into Sterling? First question: - Is this the appropriate page for finding out the correct exchange rate? Second question: -What is the relevant date for looking up the exchange rate? I have read but it is unclear to me when HMRC would consider that the employee has become 'entitled to be paid the earnings' - The bonus amount will be known around end Dec / early Jan -> would suggest either the December or January monthly exchange rate - The bonus relates to work carried out throughout the calendar year -> would suggest the calendar yearly average exchange rate (there are 2 different yearly averages on the page I linked above, one ending December and one ending March) - The bonus will be paid at end of January and/or March -> Would suggest the January and/or March exchange rate Thanks,