When a HR tax payer makes additional pension contributions into pension pot (via self assessment return), what happens with the extra tax relief? Does HMRC issue a refund to the individual? or is it linked in someway to the pension provider and becomes part of the pension pot?
Am getting myself confused, any guidance would be appreciated....
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Think of the gross value, so for example £10,000 but the client pays £8,000 after basic rate tax that the pension provider reclaims. If its a HR taxpayer the additional 20% is claimed on SA return but that's it. The value of his pension contribution is £10,000.
Long ago pension premiums were paid gross but nothing has changed as regards the value of the pension contribution or the tax relief available, just the method.