Pension Query - Double Tax Relief Problem

[Merryoldgoat]

I’m trying to untangle a pension issue for a friend. I’m an accountant and do payroll but I’m not a pension expert.

They are paying into a NEST pension - 5% of gross salary is being deducted

They are seeing 20% tax relief in the NEST applied to their contribution.

However on their payslip taxable pay is total pay less pension amount suggesting that they’re getting tax relief from the employer.

So it seems they’re getting tax relief twice?

Am I misunderstanding? Appreciate any advice etc

Someone has set up Nest incorrectly, nest was created as a big standard auto enrolment scheme - and isn’t set up initially for salary sacrifice or pre tax deductions, you’ve got to faff about with it to do that.

they need to speak to the person who does their payroll, who needs to speak to best to change the group set up to be an 8% er contribution rather than 5/3% ee and ers

Thank you - that was what I thought and I’ve told them to talk to HR & Payroll but I was worried I’d misunderstood

Many people didn’t realise it initially - they got a pack from nest and followed the instructions but those instructions were all based around relief at source set up and not salary sacrifice or other pension types! Typical really. Hope they get sorted.

Thankfully they’ve only been there a year. Hopefully he can get some answers tomorrow.

Can you please let us know what was the outcome? I think I can have same problem. Never really looked at it as I assumed it is just automatic calculation.

I will do - I heard from them yesterday and they had asked HR and the are going to both pension provider and payroll to get an answer. Their payroll is outsourced and they can be a bit hit and miss.

We had same issue in my work, payroll contacted pension company and had to send a few sample payslip for them to confirm they were getting double Tax Relief then pension company removed the Tax Relief added to pension accounts. Luckily only 4 employees so not a huge issue.

I'm glad that I didn't completely misunderstand things. Like I say, I'm not expert at payroll but I do understand the principles and the difference between the various arrangements so hopefully we'll get any answer soon.