Tax credits and pension contributions

[TalesTheCat]

I'm due to renew my tax credits but I'm struggling a bit. I pay into a workplace e pension and the payments are shown on my payslips but not on my P60. How much of the pension contributions do I take off drops earnings before adding the figure?

Are your deductions taken before or after-tax is paid?

If taken out before tax is paid you do not deduct these from the income figure on your P60.

If they are taken out after-tax (i.e. you pay tax on the whole salary, not salary after pension contributions have been removed), you can deduct the gross pension payment from your income. To calculate the deductions you need your full year's pension contribution amount. Take this figure and first divide by 80, then times that figure by 100. Then deduct that from the income shown on your P60.

Thank you
I don't pay tax as I only work part time.
I asked tax credits and they said because its a work place pension I can't deduct it. It doesn't appear on p60 but the deductions are on my wage slip. Doesn't are sense to me tho as private pensions are deductible

Do you receive tax relief into your pension directly (you should be able to see this on your pension provider's online portal). If so, you have relief at source pension and you can deduct these.

If you do not, then it means you have a net pay pension. These cannot be deducted.

You should have access to documentation on your pension from your employer or pension provider, which should clarify which type of contributions you make.

You can read more about the different contribution models here, which might clear it up www.moneyadviceservice.org.uk/en/articles/tax-relief-and-your-workplace-pension. If your pension is like "method one" you can deduct, if it is "method 2" you cannot.

If not check with your payroll/pension person at work, they will be able to confirm the type of pension, which should clear things up.

I am in this position. If contributions are shown on your payslip but not on your P60 it is because your whole salary is put through for tax purposes (though you said you don't pay tax they still declare your full earnings).
Me for example get the tax claimed back by the pension provider but I am taxed on my full salary and them they pay my contributions on my behalf. I then end up with the net pay.

I have a right nightmare each year with being told as its a workplace pension I cant deduct my pension. But I always send in my payslips and then they accept my lower earnings.

Apparently it's not the typical way of paying into a workplace pension however more companies are doing it as it costs them less and shows they are offering employees a pension.

@isitjustlockdown

Do you receive tax relief into your pension directly (you should be able to see this on your pension provider's online portal). If so, you have relief at source pension and you can deduct these.

If you do not, then it means you have a net pay pension. These cannot be deducted.

You should have access to documentation on your pension from your employer or pension provider, which should clarify which type of contributions you make.

You can read more about the different contribution models here, which might clear it up www.moneyadviceservice.org.uk/en/articles/tax-relief-and-your-workplace-pension. If your pension is like "method one" you can deduct, if it is "method 2" you cannot.

If not check with your payroll/pension person at work, they will be able to confirm the type of pension, which should clear things up.

Thank you On my pension profile it says Total payments £xxx Your payments £xxx Employer payments £xxx Tax relief £xxx Does this mean I recieve tax relief directly and its deductible? I'm sorry but I'm struggling to understand it. Tax credits have said I cant deduct a workplace pension but that seems wrong to me

Yes you can deduct it. It's known as a relief at source basis. So you basically gross up your payment.

Contribution ÷ 80 x 100.

However as you don't pay tax maybe you just need to declare the amount you pay annually without grossing it up as you haven't paid tax on it?

@SpideyMom

Yes you can deduct it. It's known as a relief at source basis. So you basically gross up your payment.

Contribution ÷ 80 x 100.

However as you don't pay tax maybe you just need to declare the amount you pay annually without grossing it up as you haven't paid tax on it?

Thank you so much. Tax credits was worse than useless. So I'm assuming I just deduct the amount and if they query it I can send the payslips to prove it?

Yes absolutely. They don't query it every year but just be ready to send if they do. I renew online and it takes months. I end up having to call them and they do it over the phone and the renewal goes through within days. If they as what kind of pension it is just refer to it as a relief at source then it can be deducted.
I agree they are useless most of the time and quite rude. I've had some nasty ones before telling me I can't get any more money than what I've had. It's never been a case of expecting more money. It's because every year they say they have overpayed me due to my contributions not being shown on my P60. I spend months being around £200 a month down until it's getting sorted. But ever renewal I am treated as being overpayed so they instantly reduce my award, unfairly in my opinion

Thank you.foe the help, I.really appreciate it.
I've spoken to the chat service twice this year. The 1st time I was told I could only deduct £300 of my pension contributions ( I took a screen shot of it) and the 2nd time that as it was a stake holder pension I couldnt deduct it. It's really confusing, especially as they don't have a clue themselves. I'm gonna deduct the pension amount on my online renewal and see what happens

@SpideyMom

Yes absolutely. They don't query it every year but just be ready to send if they do. I renew online and it takes months. I end up having to call them and they do it over the phone and the renewal goes through within days. If they as what kind of pension it is just refer to it as a relief at source then it can be deducted. I agree they are useless most of the time and quite rude. I've had some nasty ones before telling me I can't get any more money than what I've had. It's never been a case of expecting more money. It's because every year they say they have overpayed me due to my contributions not being shown on my P60. I spend months being around £200 a month down until it's getting sorted. But ever renewal I am treated as being overpayed so they instantly reduce my award, unfairly in my opinion

I've finally got through to someone in chat and they said if my pension doesn't appear on my p60 I can claim all contributions so thank you for your advice. Without it I would have probably given up trying to contact them. I also took a screen shot of the conversation incase I'm questioned.

Good. Make sure you do it every year now. I didnt know for the first 2 years so never declared it.

I'm going to wait until the end of next week and contact them to try and speed up the renewal. Money is bloody tight

You are supposed to gross it up even if you don't pay tax.

Glad you got sorted, I also have this nightmare with renewals with my own private pension and now my husband's is like yours.