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Where Taxpayers and Advisers Meet

Can I claim higher rate tax relief on employer's contributions?

flash68
Posts: 1
Joined: Mon Dec 23, 2019 7:46 pm

Can I claim higher rate tax relief on employer's contributions?

Postby flash68 » Mon Dec 23, 2019 8:14 pm

Apologies if this is a stupid question but I'm trying to work out what my pension contributions are for the purpose of claiming higher rate tax relief on them on my tax return.

My employer matches my pension contributions.

On my pay slips only my contribution is shown.

On my pension statement, the combined amount (mine and employer's) contribution is shown.

I'm assuming that tax has been collected at basic rate on my contribution only, so the gross total of these contributions will be the figure I enter on my tax return.

However, if that's the case, is my employer paying the tax on their contribution (and if so, how do they know my rate of tax?). It also seems strange that the only way to get my total contribution is to go through every pay slip as my contributions are not listed separately on my pension statement.

So if I pay £100 per month, employer also pays £100 per month, total paid into pension is £2400 per year of which I've paid £1200 net of basic rate tax.

Do I enter £1500 (1200/80*100) or £3000 (2400/80/100) on my tax return?

Thanks

AdamS93
Posts: 262
Joined: Tue Sep 26, 2017 6:28 pm

Re: Can I claim higher rate tax relief on employer's contributions?

Postby AdamS93 » Tue Dec 24, 2019 12:27 pm

You only enter contributions made out of your net salary. As all your contributions are made via your employment it is likely that you obtain tax relief at source (i.e. they deduct the pension contributions before calculating your tax) so no additional tax relief is due so you wouldn't put anything on your tax return.

If the employee contributions are made from net salary then you would include £1,500 in your personal return - the employer contributions are never included.

darthblingbling
Posts: 372
Joined: Wed Aug 02, 2017 9:09 pm

Re: Can I claim higher rate tax relief on employer's contributions?

Postby darthblingbling » Tue Dec 24, 2019 12:55 pm

Is your workplace pension NEST?

robbob
Posts: 2985
Joined: Wed Aug 06, 2008 4:01 pm

Re: Can I claim higher rate tax relief on employer's contributions?

Postby robbob » Mon Dec 30, 2019 11:52 am

The main thing here is to be 100% certain whether your pension payments have been deducted from gross salary (no extra relief due as taxable pay already reduced) - or from your net salary (extra relief available on grossed up value of your contributions if you are higher rate taxpayer). Some of the technical terms used by pension providers are somewhat confusing to say the least!


The best way to ensure you know without and doubts to get confirmation in writing from your employer as to how scheme is meant to operate and check that this tallies with the amounts that show up on your annual pension statement.
I would expect it to be clear on the annual pension statement whether your contributions are exactly as deducted from your gross salary - or whether hmrc have added 25% of this amount into your pension pot if the deductions are deducted from net pay.

Note your p60 year end taxable pay total should have lower total (after deduction of pension payments) if you have pension payments deducted from gross salary.

AdamS93
You only enter contributions made out of your net salary. As all your contributions are made via your employment it is likely that you obtain tax relief at source (i.e. they deduct the pension contributions before calculating your tax) so no additional tax relief is due so you wouldn't put anything on your tax return.
Note the bit in bold mentioned by Adam ref obtaining tax relief at source - i would add that its all a bit nonsensical but the term "relief at source" when used by pension providers in relation to deductions indicates that the payments have been deducted from net pay not gross pay !! even though Adam is 100% correct that deductions from gross pay mean you have already obtained tax relief at source in full!! - They really could not have chosen a worse way to officially use the term "relief at source" as it is the probably? the exact opposite of what you would expect it to mean!!

To add to the comedy value the method of deduction from gross salary is technically called "net pay arrangement" - so again probably?? the opposite of what you would expect.

To add to the confusion some third party operators normally do deduction from net salary (nest normally go down this route) and some normally deduct from gross salary (peoples pension normally go down this route) - so i would never presume its one method or the other without checking the full details!

Srijana Pandey
Posts: 10
Joined: Fri Jan 17, 2020 6:06 am

Re: Can I claim higher rate tax relief on employer's contributions?

Postby Srijana Pandey » Sun Jan 26, 2020 11:31 am

Dear, robbob
I agreed about your terms and words about "Can I claim higher rate tax relief on employer's contributions". This is an appreciated answer thank you for your words.

robbob
Posts: 2985
Joined: Wed Aug 06, 2008 4:01 pm

Re: Can I claim higher rate tax relief on employer's contributions?

Postby robbob » Sun Jan 26, 2020 12:08 pm

Srijana Pandey
"Can I claim higher rate tax relief on employer's contributions". This is an appreciated answer thank you for your words.
There is no relief to be claimed on employers contributions ever. For employers contributions basically what they pay in is what end up in your pension pots with no extra relief available even if you are higher rate taxpayer.

cliffordpope
Posts: 81
Joined: Thu Jun 24, 2010 8:45 am

Re: Can I claim higher rate tax relief on employer's contributions?

Postby cliffordpope » Fri May 22, 2020 5:59 pm



There is no relief to be claimed on employers contributions ever. For employers contributions basically what they pay in is what end up in your pension pots with no extra relief available even if you are higher rate taxpayer.
Tax relief on employee contributions is claimed by the employee, as an addition to the pension pot.
Tax relief on employer contributions is claimed by the employer, as an allowance against corporation tax.


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