What is date of payment for pension contributions

Employee contributions to employer scheme paid to insurer 6 weeks after deduction

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I have a client who pays contributions net of basic rate tax to his employer's scheme. The schedule from the insurer showing the contributions paid lists a due date (date of deduction from salary) and a paid date which is about 6 to 8 weeks later when the employer pays the scheme. What date needs to be taken for the contributions to be included in the Tax Return? It wouldn't normally be an issue but this year the employee has more than doubled his contributions from his April 2019 salary. Taking the date the contributions were paid over by the employer would result in 2 of the older lower payments being included. As far as the employee is concerened he started paying the higher amount from April.

 

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By Matrix
16th Jan 2021 12:56

It is a good question but I think it is the date the contributions were deducted from the employee’s pay.

Wouldn’t the employer have submitted the auto enrolment submission showing the contributions for month 12 so the pension scheme would have them included in the prior tax year? They wouldn’t include them in the tax year in which the employer physically pays them. If the employee is concerned then get them to check their pension account/statement.

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Replying to Matrix:
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By Wanderer
16th Jan 2021 13:10

I always follow what Matrix has said. Look at the total per the Month 12 payslip, which often gives the cumulative amount, & base the claim on that.

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Replying to Matrix:
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By Mallock
16th Jan 2021 13:12

Thanks Matrix. I was of the same opinion but a tired mind at this time of the year sometimes makes me question myself.

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Replying to Mallock:
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By frankfx
16th Jan 2021 14:24

Mallock wrote:

Thanks Matrix. I was of the same opinion but a tired mind at this time of the year sometimes makes me question myself.

Oh the Nuisance of poor tax reports.

The month 12 payslip shows the cumulative pension contributions.
It also shows the tax suffered, one can identify that tax relief given at source.

Now look at the P60.

This is the official tax document of record.

This is what you will report on client tax return.

No mention of pension contribution.

Either employee or employer.

Not even a memo, for posterity and archiving.

Why not?

Yet the tax payer may inform you that
He has made personal contribution, that could ( remotely) breach contribution limits.

Or indeed another 'in year' employment may have had a significant pension contribution by say the employer.

That will not feature on P45

The tax payer has to be switched on

One stop shop. On One key document.

The P60 and the P45 could at least serve as a one stop shop.

With some cumulative memo data

Likewise the number of weeks state pension contribution ( cumulative life history)could be noted here, if only to assist the taxpayer with retirement issues.

Student loans find their way in to the P60.
Perhaps for 30 years.

But of course, all this will eventually be fully digital, no paper,and tax payer will access from their RTI up to date and accurate personal tax account.

Which they will comprehend without paying for professional translation and explanation services.
Agree?

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By Paul D Utherone
16th Jan 2021 20:05

Would it not be best to get the employee to get a copy of their pension statement to see when that shows the payment as received and what was paid in the tax year.

From the OP it sounds like the employer gets to sit on the funds for 6-8 weeks before paying over to the scheme manager.

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Replying to Paul D Utherone:
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By Matrix
17th Jan 2021 08:26

I would imagine that most employers don’t pay the funds to the scheme manager until the following tax month. Most of my clients’ direct debits go out on the 15th of the following month. It would be a concern if the pension scheme showed the contribution as made in the month the payment was received rather when the pension was deducted.

I use the YTD pension on the employee March payslip.

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