Seemingly trivial things that intrigue you

pangolin

Ben6899 said:

I read something just now which intrigued me and makes me think I need to start doing tax self assessments, despite being PAYE and having always been.

Something to do with paying tax in the higher brackets, and deductions not coming out before/after (? - you can see I'm clueless) pension contributions, depending how in order your employer's payroll processes are?

Anyway, it reads like I might be paying too much tax. I know @Stevo_666 could probably shed some light. Anyone else?

If it's just pensions you're worried about, then as long as it comes out as salary sacrifice you should be ok, I think. If you pay any of it from your net salary then yes you want to do an assessment.

Also worth doing if you are earning over 50k and have things like child benefit to consider.

Ben6899

pangolin said:

If it's just pensions you're worried about, then as long as it comes out as salary sacrifice you should be ok, I think. If you pay any of it from your net salary then yes you want to do an assessment.

And you see, this is how clueless I am. All I know is that I'm in a very fortunate position (hence my shameful lack of knowledge) and my pension contribution comes out of my 4-weekly (can probably guess what industry I'm in!) wage. Does that mean it's salary sacrifice?

How can I work out, if it's coming from my net salary? Does it show in a certain way on the payslip?

TheBigBean

Ben6899 said:

pangolin said:

If it's just pensions you're worried about, then as long as it comes out as salary sacrifice you should be ok, I think. If you pay any of it from your net salary then yes you want to do an assessment.

And you see, this is how clueless I am. All I know is that I'm in a very fortunate position (hence my shameful lack of knowledge) and my pension contribution comes out of my 4-weekly (can probably guess what industry I'm in!) wage. Does that mean it's salary sacrifice?

How can I work out, if it's coming from my net salary? Does it show in a certain way on the payslip?

You could ask or work it out from a payslip. Might be easier to work it out from a P60. You can go back and redo tax returns, so potentially you could claim a number of years which could be a significant amount of money.

People failing to claim is an itemised and significant contribution to the treasury (billions).

pangolin

Ben6899 said:

pangolin said:

If it's just pensions you're worried about, then as long as it comes out as salary sacrifice you should be ok, I think. If you pay any of it from your net salary then yes you want to do an assessment.

And you see, this is how clueless I am. All I know is that I'm in a very fortunate position (hence my shameful lack of knowledge) and my pension contribution comes out of my 4-weekly (can probably guess what industry I'm in!) wage. Does that mean it's salary sacrifice?

How can I work out, if it's coming from my net salary? Does it show in a certain way on the payslip?

Mine is listed explicitly as salary sacrifice on my payslip, right under the gross salary.

If at all unclear you should have a benefits / HR team (or you might have a portal where you can make adjustments) who can tell you for certain?

pblakeney

Pension contributions should always come off before tax.

morstar

If you’re in the higher bracket, do a tax return unless on salary sacrifice.
If your pension is not salary sacrifice, you have only had 20% tax relief that is automatically added to your pension contribution.

The additional 20% tax relief on pension contributions from earnings over the threshold need to be claimed back.

If you have child benefit, coming into the household, you are expected to do one so they can work out whether/how much you need to start paying back.

If on salary sacrifice with no kids, not much doing, otherwise, there’s a good chance you are either owed or owe some money.

morstar

Also worth mentioning WFH and charity tax relief.

If you have to work from home at all (not through choice), you can claim £6 pw free of tax.

Ben6899

morstar said:

If you’re in the higher bracket, do a tax return unless on salary sacrifice.
If your pension is not salary sacrifice, you have only had 20% tax relief that is automatically added to your pension contribution.

The additional 20% tax relief on pension contributions from earnings over the threshold need to be claimed back.

If you have child benefit, coming into the household, you are expected to do one so they can work out whether/how much you need to start paying back.

If on salary sacrifice with no kids, not much doing, otherwise, there’s a good chance you are either owed or owe some money.

Surely I can’t possibly owe anything? No child benefit at any time.

I need to look at my P60(s).

morstar

Note that pension contributions should be the pre-tax total.

If £100 was put in your pension, it got topped up to £125.

You are potentially due 20% of £125 (your pre-tax earnings and not £100) back in your pocket.

Ben6899

Jesus it could be an absolute fortune

First.Aspect

morstar said:

If you’re in the higher bracket, do a tax return unless on salary sacrifice.
If your pension is not salary sacrifice, you have only had 20% tax relief that is automatically added to your pension contribution.

The additional 20% tax relief on pension contributions from earnings over the threshold need to be claimed back.

If you have child benefit, coming into the household, you are expected to do one so they can work out whether/how much you need to start paying back.

If on salary sacrifice with no kids, not much doing, otherwise, there’s a good chance you are either owed or owe some money.

Can you explain that pensions thing again?

I'm paye with no kids, but I have to do a tax return.

What am I looking for exactly?

morstar

Ben6899 said:

morstar said:

If you’re in the higher bracket, do a tax return unless on salary sacrifice.
If your pension is not salary sacrifice, you have only had 20% tax relief that is automatically added to your pension contribution.

The additional 20% tax relief on pension contributions from earnings over the threshold need to be claimed back.

If you have child benefit, coming into the household, you are expected to do one so they can work out whether/how much you need to start paying back.

If on salary sacrifice with no kids, not much doing, otherwise, there’s a good chance you are either owed or owe some money.

Surely I can’t possibly owe anything? No child benefit at any time.

I need to look at my P60(s).

If no child benefit, I wouldn’t expect you could owe them much for anything else although taxable benefits (e.g. health insurance) do need to be declared.

Also worth mentioning mileage.

If you claim for mileage and you haven’t been reimbursed the full allowable mileage rate (45ppm for first 10K then 25ppm), you can also claim tax relief on the amount you weren’t fully reimbursed.

Definitely worth getting on top of.

Ben6899

No mention of salary sacrifice on my payslips or P60. My pension contribution is listed as a deduction, alongside Income Tax and National Insurance.

morstar

Need to speak to your hr dept. If it’s a basic auto enrolment, it would be a non-issue as you don’t make contributions above threshold.

TheBigBean

Ben6899 said:

No mention of salary sacrifice on my payslips or P60. My pension contribution is listed as a deduction, alongside Income Tax and National Insurance.

Put the figures into an online tax calculator and you'll fine out.

morstar

First.Aspect said:

morstar said:

If you’re in the higher bracket, do a tax return unless on salary sacrifice.
If your pension is not salary sacrifice, you have only had 20% tax relief that is automatically added to your pension contribution.

The additional 20% tax relief on pension contributions from earnings over the threshold need to be claimed back.

If you have child benefit, coming into the household, you are expected to do one so they can work out whether/how much you need to start paying back.

If on salary sacrifice with no kids, not much doing, otherwise, there’s a good chance you are either owed or owe some money.

Can you explain that pensions thing again?

I'm paye with no kids, but I have to do a tax return.

What am I looking for exactly?

So, imagine you are earning 60K and have a pension that is neither salary sacrifice or basic auto-enrolment. You have the basic tax free allowance of 12,570

You are contributing x % of your gross salary to your pension, let’s say 20% to make the numbers interesting.

You have paid 12K into your pension.

You had 9,600 deducted from your take home. This was put in your pension and had 20% tax relief applied to make it 12,000.

HMRC taxed your salary above 50270 @ 40%.

9,740 of your salary had 40% tax applied. However, they only added 20% tax relief to your pension so you have still paid 20% tax on that 9,740. You will get this back from HMRC if you claim it. You won’t if you don’t.

The other £2,270 that went into your pension is fine. You paid 20% tax on it in your wages but you got that straight back when it went into your pension.

Salary sacrifice is much easier to understand plus you don’t pay NI.

First.Aspect

So if its basic auto enrollment, which it probably is, do nothing?

morstar

Typically these days they will then adjust your tax code for the following year so that you ideally pay the right tax the following year at source.

First.Aspect

morstar said:

Typically these days they will then adjust your tax code for the following year so that you ideally pay the right tax the following year at source.

They try, but I'm in the band where my allowance changes and HMRC are amazingly bad at guessing my base salary. You'd think 11 identical numbers each year would be enough, but no.

I take it that if I'm inputting the p60 data correctly each year, it will come out in the wash?

morstar

First.Aspect said:

So if its basic auto enrollment, which it probably is, do nothing? </blockquote

Tbh, I’ve given a bit of a bad steer there.

Even on auto enrolment, you will get the same thing happening if your earning are above the higher threshold.

Also any voluntary contributions you make are entitled to the 40% tax relief if they are from earnings taxed at that rate.

morstar

First.Aspect said:

morstar said:

Typically these days they will then adjust your tax code for the following year so that you ideally pay the right tax the following year at source.

They try, but I'm in the band where my allowance changes and HMRC are amazingly bad at guessing my base salary. You'd think 11 identical numbers each year would be enough, but no.

I take it that if I'm inputting the p60 data correctly each year, it will come out in the wash?

You’d assume so but as above, voluntary contributions to a pension won’t be in your P60. And then all the other stuff mentioned upthread, benefits in kind, mileage WFH etc.

First.Aspect

Mmm. So I should have tax back based on the proportion of my total income in the 41% and the 50% bands?

First.Aspect

Plus wfh mandate the firm imposed for the fat end of 2 years....

morstar

Anything you pay into a recognised workplace pension reduces the tax liability which can be used to bring your total tax under higher tax thresholds. I assume Scotland and England are aligned in this regard even if tax rates aren’t but I’m no expert.

Tax relief is automatically applied to pension contributions at 20% and the additional tax is reclaimed.

I have just had a nice payment from HMRC this week as my employer don’t have salary sacrifice.

morstar

The WFH is £312 untaxed so at 51% it’s a few hundred quid over two years.

First.Aspect

morstar said:

The WFH is £312 untaxed so at 51% it’s a few hundred quid over two years.

Not sure its worth the hassle, but if I have to wait on hold for an HMRC adviser for 8 hours anyway I may as well ask.

pangolin

First.Aspect said:

morstar said:

The WFH is £312 untaxed so at 51% it’s a few hundred quid over two years.

Not sure its worth the hassle, but if I have to wait on hold for an HMRC adviser for 8 hours anyway I may as well ask.

Genuinely a 10 min job to do, especially if you already have a government gateway account.

https://www.gov.uk/tax-relief-for-employees/working-at-home

Stevo_666

Ben6899 said:

I read something just now which intrigued me and makes me think I need to start doing tax self assessments, despite being PAYE and having always been.

Something to do with paying tax in the higher brackets, and deductions not coming out before/after (? - you can see I'm clueless) pension contributions, depending how in order your employer's payroll processes are?

Anyway, it reads like I might be paying too much tax. I know @Stevo_666 could probably shed some light. Anyone else?

Evening Ben,

Not necessarily just because you are a higher rate taxpayer - depends on a few things, so easiest to answer the questions here to see if you do - only takes a couple of minutes tops:
https://gov.uk/check-if-you-need-tax-return

If you are making additional voluntary contributions to your pension as you imply, then filing a return is also the way to get your extra tax relief - the pension fund grosses up your additional contributions by 20% but to get the extra 20% you need to file a tax return.

First.Aspect

pangolin said:

First.Aspect said:

morstar said:

The WFH is £312 untaxed so at 51% it’s a few hundred quid over two years.

Not sure its worth the hassle, but if I have to wait on hold for an HMRC adviser for 8 hours anyway I may as well ask.

Genuinely a 10 min job to do, especially if you already have a government gateway account.

https://www.gov.uk/tax-relief-for-employees/working-at-home

Thanks!

Stevo_666

@Ben6899

Suppose I should page you back to the thread...