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Where Taxpayers and Advisers Meet

Higher Rate Tax Relief on Pension

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm
Higher Rate Tax Relief on Pension

Postby CG » Thu Jan 23, 2020 11:04 am

I need to claim higher rate tax relief on employee pension contributions but am unsure where to enter it on the tax return.

The employer deducts pension contributions after tax has been calculated so only basic rate tax relief will have been received.

On the tax return page 4 do I enter the grossed up employee contributions in box 2 or 3. The reason I ask is that box 3 says it would be unusual to complete? However I know of lots of cases where pension contributions are deducted after tax and higher rate relief needs to be claimed, so not unusual? This is why I wonder if it is box 2?

Thanks.

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm

Re: Higher Rate Tax Relief on Pension

Postby CG » Thu Jan 23, 2020 1:04 pm

I've just spoken to HMRC and they say it is Box 1!

That confused me as I thought that was for a personal pension, not through an employers scheme.

Do you agree this is the correct box?

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

Re: Higher Rate Tax Relief on Pension

Postby robbob » Thu Jan 23, 2020 1:22 pm

I've just spoken to HMRC and they say it is Box 1!

That confused me as I thought that was for a personal pension, not through an employers scheme.
HMRC love to confuse with regard to pensions - (eg deductions from gross pay being called net pay arrangements)

I am presuming your payments are not to a retirement annuity contract therefore box 2 will not apply - if they are rac payments then box 2 might apply.


The relevant wording in note the notes with regard to box 4 is
Do not include any personal contributions that had relief at source, such as a group personal pension scheme.
From what you have said it is reasonably clear you are using a relief at source method - note with relief at source the extra 25% of payments is put directly into your pension pot by hmrc - if you have any doubts check this is the case.

The box one notes do confirm - if its relief at source it goes here - so that box isn't saying anything along the lines of don't use me - its only the wording on the other boxes that is preumably confusing you making you incorrectly presume they may be relevant.
Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (called ‘relief at source’). Enter the payments and basic rate tax

D&C
Posts:153
Joined:Mon Nov 25, 2019 11:35 pm

Re: Higher Rate Tax Relief on Pension

Postby D&C » Tue Jan 28, 2020 10:34 pm

You are overthinking this.

You need to enter relief at source contributions in box 1.

Box 2 is for retirement annuity contracts which haven't been converted to personal pensions. Retirement annuity contracts stopped in this form in 1988

Box 3 is for payments where no tax relief whatsoever has been given. This is usually defined benefit schemes like the civil service or teachers pension schemes where employees can make large one off payments too large to be accounted for via their payslips.

Box 4 is for overseas scheme

Box 1 has the explanation,
1 Payments to registered pension schemes where basic
rate tax relief will be claimed by your pension provider
(called ‘relief at source’). Enter the payments and basic
rate tax
And you originally said
The employer deducts pension contributions after tax has been calculated so only basic rate tax relief will have been received.
You should be aware there is no fixed extra 20% relief. Relief at source contributions simply increase the amount of basic rate tax you can pay. Which in turn can reduce the amount of higher rate tax payable.


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