Any tax whizzes that can explain how SIPP tax relief works please?

[Epictantrum]

I'm trying to help DH with his tax return. He recently got £10000 in vested shares from his company which he chose to transfer to a SIPP in order to get tax relief. The company transferring the shares held back 47% (presumably for tax, but it is unclear exactly how much tax was paid) and paid the remaining £5300 in shares into the SIPP. Then the SIPP company claimed back 20% of £5300 (£1060) for basic rate tax relief ("relief at source"). As he is an additional rate tax payer apparently we can claim back the rest of the tax via his tax return.
I think I've found the box on the tax return to claim it back, although the question asks for both the payments and the basic rate tax but only has one box to complete which won't accept 2 numbers, so that is my first question. Do I put £10000 and £1060? I am "missing" £3100 which is clearly more than the missing 25% of tax (why did they calculate 20% based on the £5300 and not the full £10000??).
I appreciate the answer may be "you need an accountant" but I feel there may be a simple answer to this question and otherwise his return is really straightforward. Number have been changed a bit to make it simpler.
Thanks

I’ve just read out your post to DH who’s a tax strategist. He started to explain it all (something about if the company makes the transfer into the SIPP there’s neither basic or higher rate tax relief) but then said it’s better that you get an accountant as it’s not a simple answer. Sorry!

Thanks. It's a shame as accountants fees are likely to wipe out most of any tax saving, not to mention the hours of time it has taken to try and work it out. Why do things have to be so complicated??😞

Have you tried asking AI? Or calling HMRC? I did my tax return myself for the first time at the weekend. Accountant cost me 1300 last year. I found both resources very helpful. Took me under an hour.

I haven't tried AI, I will give it a try and see what happens. I must admit I've been putting off phoning HMRC as haven't had much luck with them before. But I might have to bite the bullet and see if they can give an answer.

Good luck - hopefully you can get it sorted.

Speak to the company. They might have some simple tax guides, especially if they advised him to do this? They should also explain what they’ve done on their side and what the deducted money means.

No idea if this is correct, but this is what ChatGPT told me:

You're absolutely right that this can seem confusing—but I can help you untangle it. The crux of this situation lies in how tax relief works for SIPP contributions and the method of contribution.
🔍 Summary of Key Facts

• £10,000 worth of shares vested.
• 47% was withheld, so only £5,300 worth of shares went into the SIPP.
• The SIPP provider added 20% of £5,300 = £1,060 as basic rate tax relief.
• The individual is an additional rate taxpayer (45%).

🎯 How SIPP Tax Relief Works There are two common ways to contribute to a SIPP:

1. Relief at source: You pay a net contribution, and the provider claims 20% back from HMRC.
2. Net pay / salary sacrifice: Gross contribution is made before tax, so you get full relief via payroll.

In this case, relief at source applies. So:

• The net contribution was £5,300
• The gross contribution (what HMRC considers for tax relief) is £6,360
• → £5,300 + £1,060

If the person is a 45% taxpayer, they’re entitled to 45% tax relief on the gross contribution. Since 20% is already claimed by the provider, they can reclaim the remaining 25% of £6,360 = £1,590 through the Self Assessment tax return. 📄 How to Fill In the Tax Return On the Self Assessment form:

• Go to the section "Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (relief at source)"
• Enter the full gross amount, which is £6,360
• Do not enter the £1,060 separately – the form will work out your additional tax relief based on the gross amount.

✅ Answer to your direct question: You enter £6,360 in the box. Do not try to split the net and the 20% relief—it’s designed to take only the gross figure. 🤔 Why was only £5,300 contributed, not the full £10,000? This is the key tax mismatch. The company withheld 47%—most likely to cover Income Tax and NICs due on the vested shares. This is not a pension contribution—it’s tax compliance. Effectively:

• The person never received the full £10,000—just the net £5,300.
• That £5,300 is treated as a net pension contribution, and the gross equivalent is £6,360.

The missing “£3,100” isn’t reclaimable through pension tax relief—it’s tax that was already taken at source. Only the additional 25% relief on the £6,360 is relevant here. 🧮 Final Summary

• Box on tax return: enter £6,360 (gross amount)
• Expected extra tax relief: 25% of £6,360 = £1,590
• Nothing to be claimed on the £10,000 itself—only on what actually made it into the SIPP

Are you sure about the £1,060? They should have claimed 25% as relief at source so the total in the SIPP for a £5,300 contribution should be £6,625. The relief at source is equivalent to 20% of the total which is £1,325.

The reason it then doesn’t add up is that the full 10k isn’t in the SIPP. 6625 is in the SIPP, and 1656 is cash in the form of the 25% additional tax relief. If you put another 2700 into the SIPP it would be grossed up to 3375 to give you the full 10k in the SIPP. You’d would get a further 844 in tax relief. The difference between the 2500 tax relief and the 2700 you had to pay is the 2% NI on the 10k which can’t be reclaimed.

Call the HMRC, they, believe it or not, can be quite helpful.

Thanks everyone. I feel like I am edging towards a bit more understanding.
You are right Airborne Elephant, my numbers are wrong, they did claim £1325 so the total in the SIPP is £6625. And I can claim an extra £1656. So total £8281.
I'm not sure I understand your next 2 sentences about adding another £2700 into the SIPP. Fundamentally I keep thinking if I receive £10000 tax free, why can't I have £10000 (or at least 9800 of it with NI taken off)?? Why does a bit of tax still get nicked?

Because you’ve actually chosen to have £6625 tax free, and 3375 taxable at 45% (ignoring NI). If you want £10,000 tax free, you need to put £10,000 in the SIPP. Hence needing to add another 2700, which will be grossed up to 3375 to total 10k.

I’m not saying that was what you intended to choose BTW, it’s exceptionally confusing. But that is the actual result of claiming the additional tax back through your tax return, it’s the equivalent of getting the bit that didn’t end up in the SIPP as cash.

That's great Airborne Elephant, you will be pleased to hear that I have finally got it! Thanks so much for taking the time to explain. I've been working on it for days!

The question is were the company shares that vested sold and then a pension contribution made for that value or was an actual transfer of the shares made to the SIPP.

Does the SIPP have these shares listed as owned?
This will impact the tax treatment.

Its like the company withheld tax before transferring the shares, so only £5,300 actually went into the SIPP. The SIPP provider can only claim 20% tax relief on the amount they received, not the full £10,000. On the tax return, enter the grossed-up amount (£5,300 + £1,060 = £6,360) in the box for “Payments to registered pension schemes” to claim higher-rate relief.