maxb

The notes that go with the tax return - https://www.gov.uk/government/publications/self-assessment-tax-return-sa100 - explain that the "Payments to your employer's scheme" is only for schemes where you paid in and relief at source was NOT applied.

There's quite a lot to unpack here... First, a tax code of 1545L doesn't mean you have a larger Personal Allowance - you still have a £12570 Personal Allowance (until you lose some due to the tapering above £100k) - the tax code just means that HMRC estimated that you would have other reasons besides the Personal Allowance to pay less tax - for example if you have a history of making personal pension contributions, you might be given a tax code which assumes you will continue to do so, and releases some of that tax relief during PAYE. When you get to the end of the year, though, your tax code becomes mostly irrelevant (unless it is also being used to deal with historic under/overpayment from previous tax years), and Self Assessment recalculates everything based on actual values, rather than estimates. Next, I'm not an expert, but I've never heard of a pension arrangement where the employer applied 40% relief. I have heard of "salary sacrifice" where the employer puts the money on your pension without it having been taxed at all in the first place, which would have roughly the same effect for a 40% taxpayer, but in this arrangement, the amount is never included in your P60 gross pay in the first place. Could this be that? You might need to talk to your employer to figure out exactly what the arrangement is. Lastly, even if you were able to able to exclude both the £3000 and the £4000 from your overall income, you'd still be £500 over £100k so there would be some Personal Allowance reduction still.

PAYE only reacts correctly on its own to the increasing tax rate as you go up through the 20%, 40%, 45% bands. It fails to react automatically to someone's pay starting to move above the £100k threshold for the Personal Allowance being gradually lost. PAYE only handles that if HMRC become aware of the amount of expected full year earnings, early enough to issue a tax code change to account for the lost Personal Allowance. It's easy for that not to happen, especially if some of the pay comes in the form of an annual bonus rather than steadily throughout the year - and then you end up finding you've been under-taxed at Self Assessment, and have to pay the extra.

Yes, you do need to pay the tax. Your numbers above all look correct. The page telling you that you have no tax due at the moment is saying that because 2022/23’s tax doesn't come due until the end of tomorrow. The reason you have tax to pay, even though some is deducted automatically, is that as you have earned more than £100k, you incur a reduction to your Personal Allowance - and the PAYE system is not sophisticated enough to adjust for this automatically. The deadline for submitting the return and paying the tax is THE END OF TOMORROW but it doesn't matter which way around you do those two things. You should be able to find bank details on HMRC's website to make a payment, and I think it's linked from the end of the return submission process, too.

That guidance says PILON goes in box 3 though, not 5-9 ... Also if your PILON went through payroll so that it is included in your P45, it would have already been accounted for within the employment section of the tax return, in which case the prevailing advice given in other threads in this forum seems to be to leave it in the employment section, and only report figures not already covered there in the 'other income' section.

The fact that the pension provider is adding basic rate relief is a pretty strong indicator it is "relief at source", though. Another thing you can check to confirm is your total taxable pay, as listed on your P60 / P45 / payslips. With "relief at source" you would expect this to be your total expected salary (possibly plus the value of any taxable benefits in kind, if your employer has opted to "payroll" them instead of issuing a separate P11D). With "net pay" (also known as "salary sacrifice"), the value of the pension payments would have been removed from the total taxable pay figures. Note that even if *you* are contributing to your pension via "relief at source", your employer may also be paying in contributions, as a benefit separate from salary. Employer contributions will not benefit from tax relief, and should not be included on the tax return. Your pension provider's statement should identify the different kinds of contributions, if relevant.

Hi, The fully automatic parts of PAYE fail to take account of the reduction of Personal Allowance when you earn over £100k. As a result, the first year you earn over £100k, PAYE can easily fail to deduct enough tax, leaving you with an amount owed at Self Assessment. In subsequent years, your tax code tends to be adjusted to take account of the amount of Personal Allowance you lost the previous year - but pay rises or variable bonus pay can still throw the calculation off, leaving an amount to be paid or refunded at Self Assessment.

@HMRC Admin 10 Please could you confirm that the amount up to the £30k exemption should still be entered in "Compensation and lump sums payments up to the £30,000 exemption." ? Because in another thread in this forum, https://community.hmrc.gov.uk/customerforums/sa/8854d60e-2d98-ee11-a81c-002248c69e85, HMRC Admin 5 indicated the Other Income section (page Ai 2) did not need to be filled in at all in this case!

@bobby Baxter If you were made redundant, wouldn't you have received a P45 instead of a P60? If your P45 or P60 included the total redundancy pay, including the initial £30k of the ex gratia payment that was supposed to be exempt, then I think you have a complicated issue which might require talking to your former employer and/or HMRC to get sorted out, as your employer seems to have treated the entire payment as taxable. If your P45 or P60 included the redundancy pay, minus the £30k exemption, then that's what happened to me too, and quite a few others who have ended up at this forum - what HMRC Admin 10 already said above appears to be the consensus, though I have not been able to find any written documentation to refer to that says that.

By entering: > "Annual Allowance tax paid or payable by your pension scheme: £12000" you are declaring that you have made arrangements with your pension scheme, to have the pension scheme pay the tax on your behalf - and that's why the tax return isn't asking you to pay the tax yourself. If that's a correct declaration, it sounds like you're all good. If it's not correct, you need to leave that box empty.