Tax Credits and Pension Contributions

[NGC2017]

Hi

Please can anyone help me?

I have posted here before and spoken to many HMRC advisors on the issue and felt a little reassured until today :-(

Im paying into a pension through work. The payments I MAKE amount to £1800 a year. This does not include my employers payments. I declared my gross salary, the minused my pension contributions and gave that figure to tax credits. I became concerned as my employer basically taxes my whole salary, and then pays my contribution from my salary and then pays me the remaining money. So my P60 will read like I have received my FULL salary.

Today I spoken to an advisor as I have my P60 and she said that if my contribution is into an employers pension it CANNOT be deducted? When all the other advisors (im talking easily around 10) have all said it can but will need to be declared at the declaration stage.

I suffer with anxiety and tax credits always seem to get things wrong and tell me I owe them money, despite me being so on the ball with informing them on any changes. Though to be honest there have been no changes! The advisor today really hasn’t helped me and now I am here feeling sick that they are going to demand money from me in a few weeks time.

Me and my son struggle enough as it is. Is it really the case that if your pension is connected to your employment it doesnt count?

Any advice?

Many thanks x

anyone?

You should only deduct pension contributions yourself if you pay into a private pension not if your employer takes it out of your pay.

It says that on the notes for filling in the tax credit application form here: assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/684520/TC600_Notes_Getting_your_tax_credits_claim_form_right.pdf p12.

You could ring HMRC to confirm this if you wanted to, or check the amount on your P60 compared to your payslips (that might be quicker than waiting to talk to someone at HMRC!) The P60 records taxable pay so your pension contributions have already been taken off.

there is almost a £2000 difference between the figures on my P60 to my payslips. My P60 being higher. I am so confused :-(

There is an example here:
assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/595842/P60_HMRC_BPAYET__2017-18_.pdf

The figure on the P60 is taxable pay, so it is pay after pension deductions and anything like childcare vouchers but BEFORE tax and NI are deducted. So if you take the pay figure in the line with the star, deduct what it says for tax deducted and then what it says for National Insurance paid for the year you should get your net pay that you actually received. Does that add up?

by that, I mean that the gross, tax and NI are all showing the same. But then it details my pensions contributions which means the salary I received in my bank each month is after full tax and NI and then minus my pensions payments.
I have checked with my employer. Nest tax our full income and then take our contributions after, so I suppose whatever we are contributing is getting taxed too, but I believe that is recovered by the pension provider.

HMRC have always told me that my contributions are deducted from my gross on my annual declaration, until today where I was told otherwise

thanks for your help @dirtystinkyrats

no its different. when i take my gross monthly salary and deduced my tax and NI, I then receive £150 less which is taken as my contribution.

i would love to show my payslip to make it easier but i dont really want to get into that much detail

Yes you are right! Sorry you are not in a typical workplace pension, hence the confusion with HMRC probably.

It confirms here NEST take contributions after tax is deducted and reclaim the tax.
www.nestpensions.org.uk/schemeweb/helpcentre/contributions/calculating-contributions/calculate-tax-relief-with-earnings-basis.html

I will double check with DH when he gets home as he works in tax and payroll however, when you deducted the amount from your income, did you only deduct your actual contributions, so the £1800 a year? You might be able to deduct the tax you paid on it as well. I will need to check that though.

We received tax credits for a few years and every year they queried the deductions despite us carefully following their instructions.They are awful to deal with.

thank you once again @ dirtystinkyrats

I have honestly felt crappy all day over the news this morning, so a little hope from you has helped.

We struggle with money. I am a lone parent so I have to be on the ball with things. I dont want my DS to know how bad we have it. Maintenance has stopped being paid despite a deduction of earnings order and nothing is being done. In the meantime I am still having to pay out nearly £500 a money in debt repayments which are the ex's. So money is a huge trigger for my anxiety. And today has been terrible.

I actually feel sick, but this probably because they are awful to deal with. It doesnt matter what their advisors tell you is right. If they misinform you, it is still your fault. Every April I always feel like this dreading being told you have been overpaid. I will add to this day I have never been able to work out how they have overpaid me, but somehow they say I have so they take it back from my straight away always leaving us in a real mess

It's a 'relief at source' pension arrangement.
www.gov.uk/workplace-pensions/managing-your-pension

The text on the notes for the tax credit application form says:
"Free-Standing Additional Voluntary Contributions and payments to Stakeholder pensions.
Enter the gross amount – go to GOV.UK and search for TC825.
Don’t include anything you paid into an ‘occupational pension’ scheme (where your employer took the pension contributions from your pay before deducting tax)."

Your employer DIDNT take deductions before tax so you need to declare it and gross it up:
So you should by deducting £1800 + 20% = £2160 from your income. If you haven't been doing this they will owe you money.

really? so its most likely i wont be owing them anything?

You have really helped me feel better x