I have what may seem like a silly question.
A client who was employed for part of the tax year, has been making pension contributions (deducted after net pay). I have included this net as a personal pension contribution - 1st question - would this be the correct treatment?
Secondly - my software is asking for employers gross contribution as well - I have no idea what this was ans as the client left over a year ago, hardly think I'm likely to get the info on time - does this actually need to be put on the return?
Any help appreciated
ADP
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GROSS OR NET
You need to ascertain whether the contributions were being paid gross or net. If your client was employed then the latter should be the case but this can be a dangerous assumption if you client has been self employed at any time! Assuming they have been paid net then to arrive at gross contibutions the net contributions are grossed up at the basic rate of tax.
Just as an aside - why are you doing a tax return for someone who is no longer a client.
Martin Lord
response
thanks for that.
sorry - my original message can't of read right - he is still a client - it was his employment he left!
Net
Surely all personal pension contributions are now paid net?
Only retirement annuity premiums are paid gross and these are on contracts dated before 1988 so, if the client's payments started after that date it should be safe to assume they are net.
Andy Reeves is right
Only pension made under Retirement Annuity Pensions are payable gross. All other pension contributions, whether personal, stakeholder or otherwise are paid net of basic rate tax.
For the IT return, gross up the payments by dividing net by 0.78 and you will arrive at the gross figure to be declared on the form. Employer's contributions are not an entry for the employee's/client's personal ITR.
The employer's contributions are a deductions against their, what was Sch D profits, assuming contributions are incurred in the course of the trade and are not deemed excessive.