Tax credit renewal and pension

[LouiseBelchersPinkBunnyEars]

Hi. I have had a text from tax credits asking me to contact them as there is an issue with my renewal. I'm sure it must be to do with my pension contributions.

Just to check before I ring them- my pension contributions do not appear on my p60. Am I right in thinking that this means it's taxed at source and therfore all of it can be deducted from last years earnings?

How can I show this if they want documents?

Thank you for all your help

I don't currently operate payroll for anyone who earns under the tax limit and is in the company pension so I can't honestly answer that. I would have to seek advice from the pension company/accountant.

Don't take this as gospel but on HMRC it says this

"If you do not pay Income Tax
You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:
you do not pay Income Tax, for example because you’re on a low income
your pension provider claims tax relief for you at a rate of 20% (relief at source)"

So your pension company is automatically claiming the tax relief for you as they are entitled to, but I think it looks like your employer has got their payroll set up incorrectly for your pension which is why your P60 is showing earnings before pension deduction instead of afterwards.

Thank you foe alll your help.
I'll contact hr and see what they say

Thank you. This is really helpful and sounds right.
It's prob my last year on tax credits anyway as son is 18 and unsure if we will be able to find a suitable college (severe SEN) but i don't want to finalise last years tax credits wrong.
I'll take that knfo to hr and see what they say

Employer pensions can be set up either way.

• Relief at source

The pension is deducted from gross pay. Your P60 then shows the gross pay as your earnings less the pension contributions. If you paid tax and NI they would be calculated on the reduced amount of earnings after pension, therefore you are paying less tax at source. The deducted pension is then sent to the pension provider as a gross contribution and no tax relief is added, because the tax you have paid at source has already been reduced to account for the pension contribution.

• Not relieved at source

Your P60 shows the gross pay as your earnings. Tax and NI are calculated on your full earnings. The net pension contibution is taken from your net earnings after tax and NI. The deducted pension is then sent to your pension provider as a net contribution and they claim back the tax from HMRC, giving you the tax relief.

Neither way is right, they are just different ways of doing it.
Many people don't realise that not all workplace schemes aren't relief at source.
Higher rate tax payers who are in schemes which getting relief at source need to contact HMRC to ensure they get the higher rate tax relief.

www.gov.uk/tax-on-your-private-pension/pension-tax-relief
Relief at source
You get relief at source in all personal and stakeholder pensions, and some workplace pensions.

In your case OP it sounds like you are not getting relief at source.
Your income for tax credit purposes will be the £7,500 gross less the £500 pension contributions. You need to tell tax credits this.
You will still get the tax relief added to your pension contribution (as your post about how it hits your provider statement with the tax added indicates) as everyone (regardless of whether they pay tax or not) can make contributions upto £3,600 gross pa and get tax relief.

It isn't that your employer has set the payroll up wrong, they are just providing a workplace scheme which isn't relief at source. Perfectly acceptable and not at all unusual.

There is a useful page here in tax relief on pensions, and a section midway through specifically on how it interacts with tax credit claims. www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/do-you-know-how-tax-relief-your-pension#toc-how-do-pension-contributions-interact-with-tax-credits-and-universal-credit-

I also had a text asking me to contact them and it was because the income I was giving them didn’t match that on my P60 as I pay a small amount into a private pension, which I was deducting. I had to hold for 40 mins but when I did get through I explained and she put a note on the system and it all went through. I was ready to send a statement from my pension provider to show the contributions but she said that wasn’t needed. So once you figure out what kind of pension yours is, hopefully you just need to call them and let them know the gross figure!

Brill thank you.
I need to ring them next week. do I tell them it's not relief at source and give them the figure after deducting pension? I do have proff on my wage slips I pay into a pension so can prove easily if they question it.

Thank you
My pension is through work but like yours the figures don't match on my p60.
Thank you for the link. I'll have a read and hopefully it'll point me in the right direction

Generally when they need to speak to me (having submitted the earnings figure on my TC renewal as P60 - gross pension contributions) I just have to go through the figures, eg my P60 income is X and I've made pension contributions of Y.
The first time I had to submit a schedule of pension contributions from my provider but they haven't asked for this since.

The last few years they haven't queried the figure I put on my renewal online, just this year. I don't want to make a mistake and end up with a huge overpayment so want to make sure I get it right. I can prove my pension contributions as they are on my wage slips and can acces my on line pension account. thank you for your help. I'll ring them Monday.

yes not all employers deduct the pension before tax. So if you have worked out it is not deducted from your figure on your P60 then what you have done is correct.

Thank you. I was just wanting to make sure before I ring them.