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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am registered as self employed but for the financial year

Resolved Question:

I am registered as self employed but for the financial year 2012-13 ended up signing 2 salaried contracts with the nhs which together covered the whole period July 2012 to April 2013. During this time, money was taken from my salary each month for the nhs pension scheme.

When I did my tax return I did not remove these payments from my income as the only section that referred to pensions stated you should not include a work place pension scheme. I didn't however include them as a "expense" anywhere. As such I believe that I have paid (40%) tax on this.

Should I have? I thought they were tax free. And if I shouldn't what should I do now to reclaim the money?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

You say you were self-employed but that you signed two salaried contracts. Can you tell me where on the 2012/13 tax return you entered the gross pay and tax figures. Did you get these from a P60 or more than one P60 or did you use the pay figures from the payslips before deduction of the pension contributions.
Customer: replied 3 years ago.
Hi
There were actually 3. I took my gross pay and tax figures from:

First role: my P60 - can't find my final payslip for this so gave no record re how much pension paid... My fault!

Second role: my P45 (I couldn't find a P60 for this). Have a record of how much pension paid in this slip.

Third role: P60. Also have record of pension paid

I entered the information for each role separately in box 1 ("pay from this employment - the total from your P45 or P60") and box 2 ("uk tax taken off pay box 1). These were each on 3 separate Page E 1 's on my return.

Does that help?



Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.
Hi again.

You should read the notes here and here as part of this answer.

Normally, the pension contribution is deducted from your gross pay and the tax is then calculated on your net of pension deduction pay (the net pay route). That way, you get tax relief at whatever tax rate you would have paid tax at had the contribution not been deducted first. The problem with this is that as you had three jobs with possibly more than running at the same time, you may not have got the correct amount of tax relief on some of your pension contributions as both sets of earnings may have been taxed at 20% instead of some at 20% and some at 40% if the combined total was high enough. Whether you were liable to tax at 40% would depend on the sum total of your income from all sources.

The other way of employers dealing with pension contributions is the relief at source method. You pay a net of 20% tax relief contribution from your after tax pay and the pension provider claims the 20% tax relief from the tax office and adds it to your pension plan. If you are a higher rate taxpayer, you need to claim the additional tax relief that you are entitled to. See below.

You need to find out from the NHS how your pension contributions are accounted for, ie vis the net pay scheme or the relief at source scheme.

The figures that you should have entered in your tax return for each period of employment with the NHS are the gross pay and tax figures from your P60s and your P45s and you appear to have done this correctly. What you need to work out is whether your gross income for 2012/13 (the three gross pay figures added together exceeded £42,375, above which you pay tax at 40%.

You should get a statement from the NHS showing your pension contributions and send it to the tax office for them to assess whether you are due any extra tax relief. If some of your pension contributions were not deducted from your pay before tax was worked out, you would put the contribution figure in box 3 of the pension section at the top of page TR4 of the SA100 tax return. See the notes on page TR18 here. You can amend the return online if you need to.

I hope this helps but let me know if you have any further questions.
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