Ready made pension halifax

[Reallyyyyyy]

Hi all.

Looking for some simple advice
The end of last year I decided I really need to set myself up a pension. I'm employed by my own limited company. I have set one up with my bank halifax ready made pension.

But I don't understand the tax relief aspect.

At the moment I'm paying in £120 a month. I will up this later but that's what I have spare at the moment. I'm 33 so I will need to start upping this ASAP.

So when i put in the £120 it then says + £30 HMRC tax relief. Does this mean HMRC will contribute £30? I don't understand what or how tax relief works. Why is tax involved when it's a saving from our income which is already taxed? I'm sure I'm being dumb. But I'm not very good with these things.

I have included some screen shots as I might not have explained myself well.

Or maybe this is an awful pension and I should re think!?

Thank you!

I'm assuming this tax relief is basically a tax refund?

Pension contributions are tax free. So because you have already paid tax on the money, you get the tax back when you put it into the pension.

So you earned £150
It was taxed at 20% so what landed in your bank account was £120
You then paid that £120 into your pension
So they “refunded” the tax and the pension account received the full £150

Ah thank you @lostinthesunshine I thought this was the case but I doubt myself.

Thank you!

No problem 😊

If you pay more than 20% tax, you can claim the rest of the “refund” (tax relief) through your tax return. You just put down the amount you paid into the pension, and HMRC work it out and deduct the tax relief from your tax bill (resulting in a refund if you have paid too much).

Oh amazing! Thank you. I dodnt know this. I swear Accountants are useless. I have moved and on to my 3rd but they just don't advise you unless you go to them and ask something very specific! They never say, hey, whilst we are doing your self assessment let's take a look at what we can do for you.

If the payments are from your Limited Company, then there is no personal tax relief to gain. But reduces your company liabilities and therefore tax, so great way to get your pension. If you then pay more in from your personal account, then you can claim tax relief on this. Don’t breach the maximum contributions though.

Thank you @CurleyMango ah no, I pay myself via payroll. Then I am paying into a private pension with my bank.

I do have nest pensions for my staff but I couldn't afford to also pay into mine at the time. I should really set that up for myself also