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HMRC has apologised to a higher-rate taxpayer whose claim for additional pension tax relief stalled, and says it will now process the information he supplied. The case became stuck because he was expected to claim through Self Assessment, but HMRC had not told him that; the department offered £50 for the inconvenience.
HMRC has apologised to a taxpayer whose claim for additional pension tax relief appeared complete in the department’s app but was not paid, and says it will now process his claim. The case, reported by This Is Money, was held up because the reader was expected to claim through Self Assessment, a requirement he said HMRC had not explained to him.
The reader told This Is Money that he had tried to claim higher-rate relief on pension contributions outside his tax return. He monitored the application in the HMRC app, where its status moved from “received” to “in progress” and then “done”, but he received neither money nor an explanation. After he called HMRC, he said he was told there had been an error and that the matter was being referred to a technical team. The status later returned to “done” without a payment.
Former pensions minister and This Is Money columnist Steve Webb contacted HMRC on the reader’s behalf. Webb said the claim concerned a tax year in which the reader was due to file a tax return. HMRC’s position was that he should claim the relief through that return, rather than through the online or written route used by people who do not normally file one. The reader said no one had told him this during the process.
HMRC apologised, offered the reader £50 for the inconvenience and said it would process the application using the information he had already provided. A department spokesperson told Webb: “We’ve spoken to your reader to inform him that he should claim pension tax relief through his tax return as he is in Self Assessment.” The department did not give a payment date in the account.
How Claim Routes Affect Relief
The case shows how the route used to claim relief can matter as much as the underlying entitlement. A claim sent through the wrong process may stall even when an applicant believes they have supplied the necessary details. Here, HMRC said the reader needed to use Self Assessment; the reader’s account indicates that the app’s “done” status did not tell him whether his claim had been accepted or paid.
The sums can be material for people who qualify. Webb’s example is that a person paying £80 from take-home pay into a relief-at-source pension receives a £20 basic-rate top-up, creating a £100 gross contribution. A higher-rate taxpayer may be due a further £20 in relief on that gross contribution, subject to the applicable limits, but must claim it. Webb also said a person paying £4,000 net into a pension during a tax year could be due an additional £1,000.
Those figures are examples, not a guarantee that every taxpayer will receive the same amount. The amount available depends on a person’s circumstances and pension contributions. The case also does not establish how often claims are misrouted or whether other applicants have faced the same problem.
Relief at Source Explained
The issue concerns personal pensions and other arrangements that use Relief at Source. Under this method, a saver pays into a pension from income that has already been taxed. The pension provider claims basic-rate relief from HMRC and adds it to the pot. In Webb’s example, an £80 payment becomes a £100 gross contribution after the £20 top-up.
For a basic-rate taxpayer, that top-up supplies the basic-rate relief. A higher-rate taxpayer can be entitled to more relief on the contribution, while an additional-rate taxpayer may be entitled to more still. Webb said the additional amount is not automatically added to the pension pot through this process: it must be claimed.
Webb described two routes. People who file Self Assessment can report their gross pension contributions on their tax return; in his example, that means entering £100 rather than the £80 paid from take-home income. HMRC can then account for the additional relief in the tax calculation. People who do not normally file a return can use HMRC’s online service or write to the department with the relevant information. The case reported by This Is Money concerned a claimant who tried the latter route while expected to use the former.
““We’ve spoken to your reader to inform him that he should claim pension tax relief through his tax return as he is in Self Assessment.””
— HMRC spokesperson, quoted by Steve Webb
Payment Timing and Wider Impact
HMRC said it would process the reader’s claim based on the details already supplied, but the account gives no date for payment or confirmation that money has reached him. It also does not specify how long processing will take or whether the department will provide a further update.
The reader said conversations with others made him think the problem might be systemic. That is his impression, not evidence in the report of a wider pattern. No figures were provided for claims marked “done” without payment, errors involving the wrong claim route, or delays in resolving such cases. It is also unclear whether HMRC plans to change its app messages or claim guidance following this case.
Claimants Should Check Their Route
People seeking additional relief should check whether they are required to claim through Self Assessment for the relevant tax year. Those who do not normally file a return can consult HMRC’s guidance on claiming relief for private pension payments, which describes the online and written routes. Anyone completing a tax return should report the gross contribution, including the basic-rate top-up, according to the applicable instructions.
For this reader, the next step is for HMRC to process the information it has already received. Webb said people unable to resolve similar problems through the general helpline could raise the issue with their local MP, who can press ministers to address problems with HMRC systems. The report does not describe this as a formal appeal route or guarantee a particular outcome.
Key Questions
Why did HMRC say the reader’s claim had stalled?
HMRC said the reader was in Self Assessment and should claim the relief through his tax return. The reader said this was not explained to him while he was using another claim route.
How can a higher-rate taxpayer claim extra pension tax relief?
Webb said people who file Self Assessment can report their gross pension contributions on their return. People who do not normally file one can use HMRC’s online service or write to the department, subject to the correct route for their circumstances and tax year.
How much additional relief might someone receive?
In Webb’s example, an £80 net contribution receives a £20 basic-rate top-up, making £100 gross. A higher-rate taxpayer may be due a further £20 on that contribution, subject to applicable limits and personal circumstances.
Has HMRC confirmed when the reader will be paid?
No payment date was provided in the report. HMRC said it would process the claim using the information already supplied, and offered £50 for the inconvenience.
What can someone do if they cannot resolve a similar problem?
Webb suggested raising unresolved problems with a local MP after trying to contact HMRC. The report does not say that this guarantees a payment or faster resolution.
Source: rss
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