Group Personal Pension Error

Client with approx 200 employees has been deducting pension contributions incorrectly for several years.

Employees contribute 5% of gross salary so for example:- 

Gross Monthly Salary £2,000

Pension deduction shown on payslip £100 (i.e. 5% of gross with no tax relief)

£100 is send to pension provider, pension provider recovers the tax from HMRC (thinking that company has given tax relief to employee).

So the employee's net pay has reduced by £100 instead of £80; the pension provider has recovered an extra £25 tax relief (as they assume the employee paid £125 less £25 tax relief).

Is this a PAYE violation?   If so is the company liable to fix this & repay the tax.

Does the pension provider repay the tax?

Has anyone came across this situation & how was it handled with HMRC/Pension provide?

Many thanks for any comments.

 

Comments
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Are you sure...

George Attazder |
George Attazder's picture

What is the taxable pay?

vince8 |

Not employer contributions

tonycourt |

Not employer contributions

tonycourt |

Not often you see two people with the same misconception

George Attazder |
George Attazder's picture

It's a Group Personal Pension

tonycourt |

You're spot on Tony

irnbru |

 

tonycourt |

Are they really excess?

Marion Hayes |
Marion Hayes's picture

This isn't a tax problem - just a problem with tax consequences

tonycourt |

Not my point

Marion Hayes |
Marion Hayes's picture

just had a similar exercice

carnmores |
carnmores's picture

 

tonycourt |

@tony

carnmores |
carnmores's picture

Thanks to all comments

irnbru |