I have just realised my wife’s employer operates the relief at source system.
So her 20% employee pension contributions is taken off as 16% after she has been taxed and then her pension company adds in the extra 4% tax.
However for last couple of years her pay has went into Scottish rate of 42% ( there is also a rate of 21%). I reckon this means she should be claiming tax back on her pension conts?
Trying to google and it suggests will need to do a self assessment form which neither of us have ever done before. Is that correct and can we only do it for one year? Or is there a simpler way for just pension conts?
My employer deducts pension conts before tax which makes it much more simpler!
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I do self assessment for myself and my wife.
Set up a government gateway account for each of you.
(If you fit the criteria)
It'll tell you what to do.
It's easy and once you fill it in you can adjust your entries.
If you give to charity make sure it's given from the higher earner for the maximum benefit. You can also add previous years donations. It'll tell you how
Someone will correct but you reclaim the extra tax payments for the year 2024-25 when you fill in the return for that year.
We have UK income, foreign income and property income.give substantial charity donations making sure they can claim gift aid and you don't give more than you pay. In tax.
I've been doing our self assessment for 19 years now.
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>> I've been doing our self assessment for 19 years now.
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I've also done it for about that time. Compared to the old paper forms it's a breeze.
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We also do online self assessment.
Easy to do and amend before submitting and can still change,
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Another user who finds self assessment on line straightforward.
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Just went through the online HMRC questionnaire to see if she needed to do self assessment and none of the questions were about claiming pension tax relief so it summarised she didnt need to fill one out.
Back to google again.
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Looks like it might be this - oh joy - her paper keeping is not the best....
www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments
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Give HMRC a call.
Hold times are ridiculous but if you can do something productive while listening to hold music it's not too bad.
Once I was actually speaking to somebody my questions were answered quickly and effectively.
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Most people, I believe, will have the pension payment is deducted from the Gross Pay.
e.g Gross pay £2,500 per month. Deduct 8% pension £200. Tax & NI deducted from £2,300 (Gross less 8%)
However, there are changes coming as announced in the Autumn Statement in 2025.
A maximum of £2,000 /year allowed to be deducted from Gross Pay in 2027? In doing this the Government increases the Income Tax & NI taken from the employee.
Employers will also pay more as their NI employer payments will also rise!!
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I think, in a way only the Government can make it, I think it’s more complicated than that. The proposed £2,000 limit is only from the perspective of salary sacrifice schemes, which save employees and employers NI. The treatment of pension contributions made under a net pay or relief-at-source method remain the same for employer and employee, as the employer and employee are already paying NI on the gross pay. Salary sacrifice involves an employee giving up gross pay (saving the employer and employee NI) in exchange for a pension contribution. Whether deducted at source, by a net pay arrangement or via salary sacrifice the impact from an income tax perspective is the same as none is paid (subject to annual allowance, tapering and any carry forward capacity)
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In salary sacrifice as per Falkirk Bairn post) the gross pay is reduced so both employer and employee save on NI payments hence the new £2000 limit to reduce this, but salary sacrifice could affect benefits and also the amount of mortgage loan available. I think most employees now use salary sacrifice when available.
Not all schemes are Salary sacrifice but in most cases salary sacrifice is now the most beneficial - it wasn't always before the new 2016 state pension as the state second pension accrual was also affected.
My understanding is as follows. Under non-sacrifice the tax method depends on relief at source or net pay. Under net pay the tax taken is based on the net pay after the pension has been taken from salary in which case higher rate taxpayers should get the full tax relief. Relief at source means a payment is taken from salary after tax has been paid and then the pension provider normally claims the equivalent basic tax rate back, but higher rate tax payers need to claim back any additional tax relief.
As an aside even with no income, you can contribute up to £3,600 gross per year (£2,880 net) into a personal pensionand still receive 20% tax relief. The government adds £720, making the total contribution £3,600. This applies to non-earners, including children (and pensioners) and those with non-taxable income.
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Useful, thanks. For a brief moment I thought of stuffing my state pension into my SIPP to get some free money but it costs when I get it out...
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Relief at source pension conts - ORB>>
