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What is income tax relief.

Taxfiler is showing Income Tax relief of £4k Why ?

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I have clearly missed something and will appreciate the help of forum members please.

Client is an associate dentist. I claim Pension  Payments under : "Payments to employers scheme not deducted from gross pay."

Taxfiler is showing : P.A. 12500. Payments into Retirement scheme: amount paid is correct  : Income Tax Relief  £4k ??? 

Client is 40% tax payer.

Help please .thanks 

 

 

Replies (8)

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By jonharris999
24th Nov 2021 17:51

How much are the payments into the scheme?

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Replying to jonharris999:
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By garforth
24th Nov 2021 18:11

£14546, thanks for response

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Replying to garforth:
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By jonharris999
24th Nov 2021 18:55

That sounds about right, no? Does the tax calculation in TF tell you that the basic rate band has been increased by £18,182 on account of the pension contributions? This creates the relief.

You will want to be sure that these are indeed employee contributions not employer, and that the contribs have been made on the "Relief at Source" method. I wonder if this is a new client for you and if not, why the same thing didn't happen last year.

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Replying to jonharris999:
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By Not Anonymous
24th Nov 2021 19:05

Don't think so. The section the original post referred to is for gross contributions like lump sum payments to public sector schemes where tax relief isn't given via the net pay payroll process i.e. teacher makes lump sum contribution of £7000 to buy additional pension.

These work like the personal allowance not "relief at source" contributions so there is no increase to the basic rate band.

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Replying to jonharris999:
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By Wanderer
24th Nov 2021 19:07

You've misunderstood. Relief isn't given by basic rate extension, it's given by deduction.

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By jonharris999
24th Nov 2021 19:35

Oh, sorry. Ignore me, everyone.

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By Wanderer
24th Nov 2021 19:26

Garforth

Is there any rental income (with £4,000 losses brought forward) in these calculations? Or something else out of the ordinary?

The pension entry you are referring to should result in a line:-
"Payments into a retirement annuity contract etc."
in the calculations.

The other line you are referring to:-
"Income tax relief "
normally comes from somewhere else. (Commonly property losses brought forward & utilised this year).

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Replying to Wanderer:
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By garforth
24th Nov 2021 20:21

Wanderer I owe you a very large drink. Thank you very much. You are spot on, rental loss from last year. I was so focused on the pension payments did not look at anything else.

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