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Where Taxpayers and Advisers Meet

Pension tax relief

Chrisquig
Posts:1
Joined:Tue May 23, 2023 8:42 pm
Pension tax relief

Postby Chrisquig » Tue May 23, 2023 8:50 pm

I’ve been trying to find out how to claim additional tax relief. I’m a high tax payer and I believe I can claim 25% tax relief instead of the normal 20% tax relief when paying into my private pension.
I contacted HMRC and spoke to a guy who I’m not convinced was an expert on this. He changed my tax code there and then from S1263L to S1342L. How does my private pension company know to claim 25% instead of 20%. My pension company told me to contact HMRC which I did as previously explained. Do I need to fill out a tax assessment form to claim the additional 5% at the end of the tax year 2023/2024. ???

D&C
Posts:149
Joined:Mon Nov 25, 2019 11:35 pm

Re: Pension tax relief

Postby D&C » Wed May 24, 2023 11:12 am

I think you've got very confused.

Can you explain why you think you can claim 25% tax relief??

The pension company will only ever add basic rate tax relief, which happens to be 25% of your contribution.

For example, you add £800. The pension company adds £200 giving you a pension fund of £1,000.

£200 is 20% of the gross contribution.

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: Pension tax relief

Postby bd6759 » Wed May 24, 2023 4:09 pm

The Basic Rate tax relief is added to your pension by the pension provider.

You get higher rate relief by paying less tax. This is why your tax code is amended. This is not added to your pension.

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Pension tax relief

Postby robbob » Thu May 25, 2023 2:14 pm

Can you explain why you think you can claim 25% tax relief??
The pension company will only ever add basic rate tax relief, which happens to be 25% of your contribution.
For example, you add £800. The pension company adds £200 giving you a pension fund of £1,000.
To be fair to the op if they add £800 into their pension direct and are eligible for higher rate relief that relief would be £200 (1000 * 20%) - that does work out as being 25% of cash amount they have added into the pension.



Chrisquig
if hmrc amend tax code you want to be very careful that code is correct every year based on correct calcs - this goes wrong so often when peeps try and do it themselves and speak to hmrc advisors who may be sketchy or plain wrong.
Its easy for something to be done now that could give you relief for eternity till hmrc realise it was all wrong - thats justa posibility hopefully it works out for you. D&C has raised great points though ref grossing up - always cross referenec gross and net so that you can avboid any confusion - sometimes using one or the other can confuse - golden rule is that automatic add into pot will be 20% of gross. If your code is revised correctly you are now getting the "higher rate relief" on ongoing basis as you are paying less taxc than you were before. The tax reduction on lfl basis should match the 20% (of gross) - 25% (of net amount added) to pension.


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