HMRC Refusing Higher Rate Tax Relief

[AWOL]

Hi,

My wife is a Higher Rate tax payer and each year we write a letter requesting a refund for the tax relief on her Vanguard SIPP contributions and they reimburse her. However this year they have told her that it as her contributions are to a Net Relief pension scheme and she isn't entitled to a rebate. Am I missing something or are they confused?

I am going to help her write another letter restating the position. Am I barking up the wrong tree?

She also contributes to an NHS pension scheme but we do not reclaim anything for those payments as this scheme does do relief at source but the Vanguard scheme does not and cannot operate in that method.

In the old days I'd have suggested that she phones them but I believe the government significantly reduced the manning of the phones so that doesn't seem a good use of time.

Thanks,
AWOL

[scrumpyjack]

Hi,

My wife is a Higher Rate tax payer and each year we write a letter requesting a refund for the tax relief on her Vanguard SIPP contributions and they reimburse her. However this year they have told her that it as her contributions are to a Net Relief pension scheme and she isn't entitled to a rebate. Am I missing something or are they confused?

I am going to help her write another letter restating the position. Am I barking up the wrong tree?

She also contributes to an NHS pension scheme but we do not reclaim anything for those payments as this scheme does do relief at source but the Vanguard scheme does not and cannot operate in that method.

In the old days I'd have suggested that she phones them but I believe the government significantly reduced the manning of the phones so that doesn't seem a good use of time.

Thanks,
AWOL

If you fill in a tax return and put in the income, tax deducted at source and pension payments correctly, it should all come through automatically.

[Sobraon]

Yes my wife had a similar problem when HMRC got confused between her company pension contributions and contributions to a SIPP from taxed (HR) pay. We had to spell it out very clearly and draw apart the two schemes. Eventually after about three years we managed to get a form of words for the annual letter which prompted HMRC to provide a rebate, initially via a cheque but more latterly via a change in her coding. This worked ok for about 10 years but we had to prompt every year.

[AWOL]

Yes my wife had a similar problem when HMRC got confused between her company pension contributions and contributions to a SIPP from taxed (HR) pay. We had to spell it out very clearly and draw apart the two schemes. Eventually after about three years we managed to get a form of words for the annual letter which prompted HMRC to provide a rebate, initially via a cheque but more latterly via a change in her coding. This worked ok for about 10 years but we had to prompt every year.

We had reused the letter that worked in previous years. I have no idea why it didn't work this year. I'll try spelling it out in simpler terms.

If you fill in a tax return and put in the income, tax deducted at source and pension payments correctly, it should all come through automatically.

I'll keep the self assessment as a last resort as other than claiming pension tax relief, and professional fees, my wife's tax matters are very straight forward. Although on the other hand the self assessment system has got simpler with time.

[chris]

AWOL

Whilst you are probably in the right about last tax year's contributions, it is not beyond the realms of possibility that the company changed the scheme to a salary sacrifice scheme for that tax year. Whilst everyone should have had to sign a contract variation at the time, it may have come at the same time as a pay rise and your wife may not have realised the significance (or they may not have done it properly).

Whilst you can't tell from a P60, you can certainly tell from the last payslip in the year where it should show not only gross pay, tax and NI but also employee pension (normally titled just 'pension') and Employer pension. If the 'pension' shows as zero, then the pension scheme was changed to a salary sacrifice scheme and if it shows as an amount, you could send a copy of that payslip to HMRC, highlighting the amount, and stating that this proves that the scheme was not a salary sacrifice scheme and that this proves the net contribution and that a tax refund is due.

Alternatively (and probably more acceptable to HMRC), the pension scheme should also be able to give you a certificate of employee pension paid in the year (this should be available online from your wife's login), which will also prove the point. It should show the amount paid in and the amount it reclaimed or was entitled to reclaim due to that payment (which would be the basic tax reclaimed).

When I claimed a tax refund, I always sent the pension scheme annual certificate with the letter, mainly because I would often make additional contributions. This was always accepted by HMRC.

Chris

[AWOL]

Hi Chris,

My wife's Vanguard SIPP is purely a private arrangement between her and Vanguard with no employer involvement. She attached the contributions statement to her letter to HMRC. I have written to them again explaining why I believe they have made a mistake in suggesting her contributions from her bank account of after tax earnings into the Vanguard SIPP were to a "Net relief pension". I have also supplied her taxable income after deductions pointing out that it is above the Higher Rate threshold.

If this approach fails we will start doing Self Assessment for her. This shouldn't be necessary but should work if nothing else does.

Cheers,
AWOL