peekay

Hi bwearryyu, No loss in translation, same calculation for last 4 tax years. My contributions (inc. provider top up) *1.25. Put another way, the pension provider grosses up the £6000 so £6000/(1 - 0.20) = £7,500, then in turn HMRC are grossing up the £7,500 so £7,500/(1 - 0.20) = £9,375. Essentially you have to be proactive. Put £8,000 into your pension (so a voluntary top up of £2,000 aside from your £6k salary contributions, which you might not have until your rebate many months later...). This becomes desired £10,000 after provider top up. Then £12,500 will moved to basic rate tax calculation leading to a £2,500 rebate. This relies on you actually having more than the hypothetical £10k but we're assuming that as 40% tax payers but you end with £1,375 less in your pocket but £2,500 more in your pension.

Also confused by this. I submitted my reclaim last year and I'll round the numbers to match the example. I made contributions out of my after tax salary of £6,000. My pension provider topped this up by £1,500. So I submitted a figure of "total pension contributions (including basic rate tax relief)" of £7,500 to HMRC. They then adjusted my 22/23 tax calculation by reducing my 40% tax bill by £7,500*1.25 = £9,375 and adding it to my 20% bill. Therefore a saving of £1,875. So in summary, for my £10k earned, £7.5k has gone into my pension and I've paid £2,125 in tax (£4k - £1,875). I could then add this £1,875 rebate to my pension and £2,343.75 (x1.25) will be added, leaving me £156.25 short of the original £10k.I guess I then tell HMRC that my pension contributions are now £9,843.75 (ignore that it's a different tax year), they recalculate and I get another small rebate, I top up my pension again, etc etc...