maxb

I could be wrong, I'm not a professional, but as far as I can see, the rules surrounding this particular limit seem to be phrased in terms of relief obtained, not total contributions. I'm happy to be corrected if you have a citation to the contrary!

@Keith Cheasman State pension does start from one's birthday, and I didn't say otherwise ("Add on the 2 days from the initial partial week..."). Based on information found in "How to fill in your tax return" found at https://www.gov.uk/government/publications/self-assessment-tax-return-sa100 combined with other information online about the effective date for State Pension increases each year being the first Monday of the tax year, I had come to the understanding that HMRC interprets State Pension as accruing based on a Monday-to-Sunday payment week, as that seemed the only way to make the various information make sense as a whole. However, I've just today come across https://researchbriefings.files.parliament.uk/documents/SN00260/SN00260.pdf which actually brings together some hard-to-find information about the changes over the years, and is causing me to reevaluate what I previously believed. Your 54 days figure now looks correct to me, and I speculate that HMRC have applied some incorrect logic based around whole weeks and earlier versions of the State Pension to arrive at 56 days.

I can only think the answer would be "yes, it does reduce it" as: * there is no question that salary sacrifice does reduce taxable income * the calculation of "threshold income", a different income value used in some pension calculations, relies on a specific additional rule to bring salary sacrifice back into scope, and no such specific additional rule is present in the definition of adjusted net income.

My reading of the HMRC response, and other material online, is the opposite - claim the entire £1250 in 2024/25. There aren't any boxes on the tax return for contributions with relief pending in a future year, nor relief received in respect of an earlier year, and Finance Act 2004 s. (1) and (3) [https://www.legislation.gov.uk/ukpga/2004/12/section/192], though not entirely clear, seem to favour treating the entire contribution as an indivisible single event.

I think I can help - I've read the relevant rules far too much trying to deal with my own and my family's tax affairs... The Annual Allowance is a common kind of pensions limit people run into, so it's what a lot of the information that is readily findable is talking about - but it's not the one that might apply to your case. (The Annual Allowance is currently £60000 unless reduced due to much higher income, or having already started to take benefits back out of pensions.) The carry-over of unused allowance from previous years, paying tax charges, needing to do so via Self Assessment, and using on online calculator specific to the Annual Allowance are all details relating to the Annual Allowance, and therefore not relevant to your current situation. You mention you are concerned about paying more into your pension than your annual salary - which is indeed another kind of threshold people paying into a pension need to be aware of - it's often referred to using the words "relevant earnings", as is written in the Finance Act 2004 Section 190 as "The maximum amount of relief to which an individual is entitled ... is ... the amount of the individual’s relevant UK earnings which are chargeable to income tax...". I think you might be within the limit, though! You've said total contributions are only slightly over annual salary, and that some of the contributions were employer contributions... importantly, employer contributions do not qualify for tax relief, and your pension scheme will know this and not have claimed relief on the portion declared by your employer as employer contributions. In the example given, this seems likely to bring the portion of contributions on which relief was paid back down within the annual salary, so everything is good. [Citation for contributions paid by employers not being relievable pension contributions: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#relievable] Regarding your final question, about relief arriving in your pension later than the original contribution to which it relates - no, the relief is dealt with as part of the same tax year as the original contribution, even when it takes longer to be retrieved from HMRC. That came up recently in these forums at https://community.hmrc.gov.uk/customerforums/sa/bdde8465-95f4-ef11-a4de-002248c7d37d and other threads.

HMRC Admin 5's response that Gift Aid donations cannot be carried back for the purposes of Adjusted Net Income appears to be in error, as https://www.legislation.gov.uk/ukpga/2007/3/section/58 states: "For the purposes of Chapters 2 and 3, an individual's adjusted net income for a tax year is calculated as follows. ... If in the tax year the individual makes, or is treated under section 426 as making, a gift that is a qualifying donation for the purposes of Chapter 2 of Part 8 (gift aid) deduct the grossed up amount of the gift." wherein the section 426 referred to is "Election by donor: gift treated as made in previous tax year", and the use of adjusted net income in the tapered personal allowance is dealt with in the chapter 2 referred to. The restriction "For the purposes of Chapters 2 and 3, an individual's adjusted net income for a tax year is calculated as follows" does introduce ambiguity on whether adjusted net income can mean something else outside those limits, however for the case of HICBC, this is specifically clarified at https://www.legislation.gov.uk/ukpga/2003/1/section/681H

I'm fairly sure the date that matters is the always the date of the original contribution reached the scheme, as Self Assessment doesn't seem capable to representing a net contribution in one year and its relief in the following year, and nothing seems to be written anywhere about that kind of split treatment being a thing. However since I've never been able to find anything online that outright confirmed this, when this mattered to me, I chose to ask the SIPP provider to confirm the tax treatment of the particular payment, so I had something in writing - which they did, attributing the relief to the tax year of the original contribution.

Why not use the real amounts paid? Unfortunately I can only offer the rather unsatisfying answer that the government wrote the laws such that pensions are treated differently. I'm not sure if the underlying history that led to the laws being written in that way. In arriving at the figure of 54 days, it looks like you've measured the time from your birthday to the last payment day. You used the word accrued in describing it, but I don't think that's correct. The state pension accrues weekly - even though it only gets paid out 4-weekly. I count 8 complete Monday to Sunday weeks between your 2021 birthday and the end of the tax year... 8 weeks is 56 days. Add on the 2 days from the initial partial week makes 58 days... It almost seems like HMRC forgot to tax you on those 2 days' pension. In following tax years, you've said they followed the 1 week old rate, rest of year new rate pattern, which also is as expected for taxing full weeks as they complete and accrue.

If your pension is deducted from your wages **before** tax, you have no further relief to claim, as you've already fully benefited from not being taxed at all on the portion of your earnings contributed to your pension. This is because not only was tax not deducted during payroll, but additionally the amount of the contributions was removed from being included in the total pay figure on your P60 certificate. (Check that number to confirm it is what you would expect.) This means there was more space left within your basic rate band, allowing more of your self-employment income to be taxed at basic rate that would be the case without the pension contributions, automatically granting you the equivalent to the additional relief due for someone making pension contributions as a higher rate taxpayer.

(I'm replying whilst the previous post is still in moderation and hidden - I can't currently see it.) The annual allowance applies to the total of all amounts going into your pension, i.e.: 1) Anything you pay in 2) Any basic rate relief that is claimed by your pension provider and added to your pension 3) Anything anyone else pays in (e.g. your employer) Of the options you listed, this is closest to b), but employer contributions use up the allowance too. Higher rate relief claimed on the tax return does not affect the annual allowance, because it is not paid into the pension, instead being returned to the taxpayer's general income.