maxb

Here is a possible reason why what you have mentioned could have happened: When you started employment in January, you may have been given a PAYE tax code which instructed your employer to calculate your tax free amount only based on the months they were actually paying you. If so, now you are filling in Self Assessment, it is looking back over the entire year, and finding you have unused Personal Allowance within the whole year which can be set against your employment earnings - meaning you would have paid more tax than is due, and can get it back.

In previous years, I have noticed that there is a bug in the HMRC website's display of the "full calculation" - if you have dividend income that is small enough to fit within 0% dividend band, it doesn't show the dividend section or subsequent sections at all! This can be a problem, as even if dividends are taxed at 0%, they still affect the calculation by taking up space in bands which can affect how other income is taxed. This might be making the subtle cases being discussed in this thread even harder to understand.

@Kingsley Packer: Since you invested in tax year 2023/24, the rules say you can claim against tax due in that year, or you can treat the investment as if it occurred the previous year, claiming against tax due in 2022/23. You can't claim against tax due in other years. I'm not sure whether you're asking because you don't have enough tax due in 2023/24 to make use of all the relief, or if you're asking whether you can claim on future years tax returns to avoid being forced to make a separate paper claim... If the latter, you can't claim on future years tax returns, *but* if you receive the certificates whilst your tax return for a previous year, that you want to claim against, is still accepting amendments, it can be very convenient to just amend your previously submitted return to include the additional EIS relief, instead of needing to follow the paper claim form process.

@Vladimir Sovetkin: Since you invested during tax year 2021/22, your choices are to claim the relief against tax due in 2021/22, or the year before, 2020/21 - not any other years.

That document doesn't cover this case. But, I asked my pension provider once and was told the date that matters is when your contribution is accepted into the pension - that's when you became entitled to the tax relief, even if it took some days for the funds to actually be retrieved from HMRC.

I think the point the calculator is trying to communicate is that the unused allowance from 2021/22 is inaccessible *after* 2024/25, and will not be available in 2025/26

The simplest option would be to just fill in the online tax return with such a case, and see what it calculates. An alternative option would be to look at the Notes document that explains the SA110 Tax Calculation Summary form used in paper tax returns. The Notes document includes an elaborate workings sheet (the notes run to 53 pages). On page TCSN 13 of the notes, it seems to be suggesting that the starting rate band size is limited only by the amount of non-savings income - but I didn't spend that much time chasing references around the various numbered boxes.

@smd61 The higher rate relief never goes to the pension, it goes to the individual - but, the amount of the relief is calculated such that you do not receive it tax free - effectively you end up paying tax on the relief refund. You should make a contribution such that the amount plus basic rate relief is the amount you actually want added to your pension. Once you claim and receive the higher rate relief, your final position will be as if you paid no tax on the sum that ended up within your pension, and you paid your normal rate of tax on the Income that didn't enter your pension - just by a somewhat complex route.

@K T, It's not (in this case) an issue with HMRC - the rules in this particular case are fairly clearly set out. It's a shame your payroll provider accepted instructions to process a deduction in March if they wouldn't process it in good time to make the end of the tax year. > March 2023 (2023/24) and then again in April 2023 (2024/25) These dates don't make sense... I guess you meant to write 2024 in each place you wrote 2023? Now the contributions have been made, I believe your only recourse is to allocate them against your Annual Allowance for 2024/25 first, and then apply any unused Annual Allowance you may (or may not) have available to carry forward from 2021/22, 2022/23, and 2023/24. Since you were apparently planning to make a big contribution in 2023/24, but did not, perhaps this will work well for you... although if the first contribution was intended to rely on carried forward Annual Allowance from 2020/21, that has now been unavoidably lost. There is no provision to carry Annual Allowance back from future years.

Hi Andrea, Neither of those are correct - the actual situation is: £6000 (net contribution) plus £1500 (tax relief claimed at 20%, £6000 / 0.8) = £7500 total contribution to pension £10000 - £7500 = £2500 effectively returned to you but itself subject to Income Tax as it is returned; if at 40%, £2500 * 0.6 = £1500 net refund