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Finances / Finanzen » uk.finance » How to pay into a public sector pension and *not* get tax relief (Pre-A-Day)
| How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390527] |
Do, 25 Mai 2006 22:28 |
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Ho hum.
Child born just before start of tax year - mother on maternity leave
(Normal & additional - i.e. last six months unpaid) for all of 05-06.
Decides to buy back teachers pension rights for that time, send off
cheque to TPS, told as it's a "Method B" lump sum, it's paid gross and
tax relief should be claimed from HMRC (I know it's strange, but that's
what they say - even for basic-rate tax)
HMRC reply that no tax-relief available as earnings were not high enough
(no surprise as only earnings were 26-weeks SMP) to have paid sufficent
income tax in the first place.
HMRC pensions bod agrees that's not the case with stakeholder pensions,
but confirms that is situation in this case.
The amount involved is worth a couple of written complaints^whinges, but
to whom?
Any thoughts?, Alan
--
99 Ducati 748BP, 95 Ducati 600SS, 81 Guzzi Monza, 74 MV Agusta 350
"Ride to Work, Work to Ride" SI# 7.067 DoD#1930 PGP Key 0xBDED56C5
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| Re: How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390555 ] |
Fr, 26 Mai 2006 10:16 |
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"Alan Frame" wrote
> Ho hum.
>
> Child born just before start of tax year - mother on maternity leave
> (Normal & additional - i.e. last six months unpaid) for all of 05-06.
>
> Decides to buy back teachers pension rights for that time, send
> off cheque to TPS, told as it's a "Method B" lump sum, it's paid
> gross and tax relief should be claimed from HMRC (I know
> it's strange, but that's what they say - even for basic-rate tax)
>
> HMRC reply that no tax-relief available as earnings were
> not high enough (no surprise as only earnings were 26-weeks
> SMP) to have paid sufficent income tax in the first place.
Hmmmm. Pre-A-Day, the total of normal pension
contributions, plus "Method B" lump sums, plus any
"Method A" regular contributions, plus any FSAVC
premiums, had to be within the "15% of earnings" limit.
If earnings were too low to have paid the
relevant amount of income tax, then is the
"Method B" lump sum under 9% of earnings?
[Assuming normal 6% member
contributions already paid to TPS.]
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| Re: How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390702 ] |
Mo, 29 Mai 2006 18:48 |
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Tim <me [at] home.uk> wrote:
> "Alan Frame" wrote
> > Ho hum.
> >
> > Child born just before start of tax year - mother on maternity leave
> > (Normal & additional - i.e. last six months unpaid) for all of 05-06.
> >
> > Decides to buy back teachers pension rights for that time, send
> > off cheque to TPS, told as it's a "Method B" lump sum, it's paid
> > gross and tax relief should be claimed from HMRC (I know
> > it's strange, but that's what they say - even for basic-rate tax)
> >
> > HMRC reply that no tax-relief available as earnings were
> > not high enough (no surprise as only earnings were 26-weeks
> > SMP) to have paid sufficent income tax in the first place.
>
> Hmmmm. Pre-A-Day, the total of normal pension
> contributions, plus "Method B" lump sums, plus any
> "Method A" regular contributions, plus any FSAVC
> premiums, had to be within the "15% of earnings" limit.
With you there - one would hope that TPS can calculate the correct
figure - we asked 'em "How much to make up for reduction in pension
caused by maternity leave?" and paid what they asked...
> If earnings were too low to have paid the
> relevant amount of income tax, then is the
> "Method B" lump sum under 9% of earnings?
> [Assuming normal 6% member
> contributions already paid to TPS.]
.... during AML, the 6% isn't paid, AFAIK - in fact the amount was in the
order of (15% salary minus fractional contribution/deduction on SMP)
Maybe you've found the problem -
IMO, Yes, if "earnings" are "normal contractual salary", but
No if "earnings" are "actual amount recieves during tax year:period of
Standard/Additional Maternity Leave", 'cos that was notmuch/zero.
Do TPS use the former meaning, but HMRC the latter?
No FSAVCs or Method A additional contributions, BTW.
I can't believe that buy-back for maternity leave is an uncommmon
situation.
Thanks, 'shoulda Stake'd/SIPP'd it' Alan
--
99 Ducati 748BP, 95 Ducati 600SS, 81 Guzzi Monza, 74 MV Agusta 350
"Ride to Work, Work to Ride" SI# 7.067 DoD#1930 PGP Key 0xBDED56C5
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| Re: How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390707 ] |
Mo, 29 Mai 2006 19:09 |
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> > "Alan Frame" wrote
> > > Ho hum.
> > >
> > > Child born just before start of tax year - mother on maternity leave
> > > (Normal & additional - i.e. last six months unpaid) for all of 05-06.
> > >
> > > Decides to buy back teachers pension rights for that time, send
> > > off cheque to TPS, told as it's a "Method B" lump sum, it's paid
> > > gross and tax relief should be claimed from HMRC (I know
> > > it's strange, but that's what they say - even for basic-rate tax)
> > >
> > > HMRC reply that no tax-relief available as earnings were
> > > not high enough (no surprise as only earnings were 26-weeks
> > > SMP) to have paid sufficent income tax in the first place.
> >
> "Tim" wrote:
> > Hmmmm. Pre-A-Day, the total of normal pension
> > contributions, plus "Method B" lump sums, plus any
> > "Method A" regular contributions, plus any FSAVC
> > premiums, had to be within the "15% of earnings" limit.
>
"Alan Frame" wrote
> With you there - one would hope that TPS can calculate the correct
> figure - we asked 'em "How much to make up for reduction in pension
> caused by maternity leave?" and paid what they asked...
>
> "Tim" wrote:
> > If earnings were too low to have paid the
> > relevant amount of income tax, then is the
> > "Method B" lump sum under 9% of earnings?
> > [Assuming normal 6% member
> > contributions already paid to TPS.]
>
"Alan Frame" wrote
> ... during AML, the 6% isn't paid, AFAIK - in fact the amount was in the
> order of (15% salary minus fractional contribution/deduction on SMP)
>
> Maybe you've found the problem -
>
> IMO, Yes, if "earnings" are "normal contractual salary", but No
> if "earnings" are "actual amount recieves during tax year:period of
> Standard/Additional Maternity Leave", 'cos that was notmuch/zero.
>
> Do TPS use the former meaning, but HMRC the latter?
I believe they both use the latter.
Were the Method B contributions paid *during*
the period of ML, or after returning to work?
If during ML, then they may actually be "illegal"...
[Classed as "Overcontributions".]
"Alan Frame" wrote
> No FSAVCs or Method A additional contributions, BTW.
>
> I can't believe that buy-back for maternity
> leave is an uncommmon situation.
Acccording to my source for TPS, :- "Unusually if there
is no pay during a maternity leave, there is no facility
to buy back benefits by paying missed contributions."
[The "Method B" contribution is just a general "buy-back"
system used in TPS, independent of Maternity...]
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| Re: How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390710 ] |
Mo, 29 Mai 2006 20:52 |
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Tim <me [at] home.uk> wrote:
[ buy back teachers pension .. maternity leave .. no tax-relief]
> "Alan Frame" wrote
> > ... during AML, the 6% isn't paid, AFAIK - in fact the amount was in the
> > order of (15% salary minus fractional contribution/deduction on SMP)
> >
> > Maybe you've found the problem -
> >
> > IMO, Yes, if "earnings" are "normal contractual salary", but No
> > if "earnings" are "actual amount recieves during tax year:period of
> > Standard/Additional Maternity Leave", 'cos that was notmuch/zero.
> >
> > Do TPS use the former meaning, but HMRC the latter?
>
> I believe they both use the latter.
Ah!
> Were the Method B contributions paid *during*
> the period of ML, or after returning to work?
During - SO has *not* returned to work, and payment was made during AML
- TPS /were/ told that....
> If during ML, then they may actually be "illegal"...
> [Classed as "Overcontributions".]
Ooooh! I hope that means that we can get it back.
> "Alan Frame" wrote
> > I can't believe that buy-back for maternity
> > leave is an uncommmon situation.
>
> Acccording to my source for TPS, :- "Unusually if there
> is no pay during a maternity leave, there is no facility
> to buy back benefits by paying missed contributions."
A reference for that would be greatly appreciated - obviously, there
/was/ some pay for the first six months, but that had normal (abeit
reduced) deductions/contributions.
> [The "Method B" contribution is just a general "buy-back"
> system used in TPS, independent of Maternity...]
Thanks again, Alan
--
99 Ducati 748BP, 95 Ducati 600SS, 81 Guzzi Monza, 74 MV Agusta 350
"Ride to Work, Work to Ride" SI# 7.067 DoD#1930 PGP Key 0xBDED56C5
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| Re: How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390718 ] |
Di, 30 Mai 2006 10:17 |
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> [ buy back teachers pension .. maternity leave .. no tax-relief]
>
> > "Alan Frame" wrote
> > > ... during AML, the 6% isn't paid, AFAIK - in
> > > fact the amount was in the order of (15% salary
> > > minus fractional contribution/deduction on SMP)
> > >
> > > Maybe you've found the problem -
> > >
> > > IMO, Yes, if "earnings" are "normal contractual salary", but No
> > > if "earnings" are "actual amount recieves during tax year:period of
> > > Standard/Additional Maternity Leave", 'cos that was notmuch/zero.
> > >
> > > Do TPS use the former meaning, but HMRC the latter?
> >
> "Tim" wrote:
> > I believe they both use the latter.
>
"Alan Frame" wrote
> Ah!
>
> "Tim" wrote:
> > Were the Method B contributions paid *during*
> > the period of ML, or after returning to work?
>
"Alan Frame" wrote
> During - SO has *not* returned to work, and payment
> was made during AML - TPS /were/ told that....
>
> "Tim" wrote:
> > If during ML, then they may actually be "illegal"...
> > [Classed as "Overcontributions".]
>
"Alan Frame" wrote
> Ooooh! I hope that means that we can get it back.
If they are illegal, they should be refunded.
> > "Alan Frame" wrote
> > > I can't believe that buy-back for maternity
> > > leave is an uncommmon situation.
> >
> "Tim" wrote:
> > Acccording to my source for TPS, :- "Unusually if there
> > is no pay during a maternity leave, there is no facility
> > to buy back benefits by paying missed contributions."
>
"Alan Frame" wrote
> A reference for that would be greatly appreciated -
Unfortunately, I can't reveal the source
- but I believe it's pretty trustworthy...
The fact that TPS suggested 'Method B' added years to
"buy-back" the missing service, which is a method available
to *anyone* in the TPS scheme (unless they will already
get a "full" pension), does support the statement though.
"Alan Frame" wrote
> ... obviously, there /was/ some pay for the first six months,
> but that had normal (abeit reduced) deductions/contributions.
The 15% rule does (or rather did - pre-'A-day') apply to
tax years. So she'd have been able to pay (over the tax
year) upto 15% of the total earnings during that tax year.
Does that help the calculation a bit?
> "Tim" wrote:
> > [The "Method B" contribution is just a general "buy-back"
> > system used in TPS, independent of Maternity...]
>
"Alan Frame" wrote
> Thanks again, Alan
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| Re: How to pay into a public sector pension and *not* get tax relief (Pre-A-Day) [message #390782 ] |
Do, 01 Juni 2006 00:03 |
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Tim <me [at] home.uk> wrote:
> > [ buy back teachers pension .. maternity leave .. no tax-relief]
> > "Tim" wrote:
> > > Acccording to my source for TPS, :- "Unusually if there
> > > is no pay during a maternity leave, there is no facility
> > > to buy back benefits by paying missed contributions."
> >
> "Alan Frame" wrote
> > A reference for that would be greatly appreciated -
>
> Unfortunately, I can't reveal the source
> - but I believe it's pretty trustworthy...
Spoke to a wonk [at] DfES today who pointed out the "Method B *may* be
eligible for tax relief" bit from the TPS info - alas, it appears that
we should have confirmed that before writing the cheque.
I fear that taking the matter further may be getting into "determing the
intent of parliament" territory, but I'll probably drop a note to the
NUT/ATL/whatever other one SO is in/ HMRC commisioners/PO/MP before
admitting defeat.
<sigh>
And I thought I was reasonably financially-aware....
rgds, 'this email address works' Alan
--
99 Ducati 748BP, 95 Ducati 600SS, 81 Guzzi Monza, 74 MV Agusta 350
"Ride to Work, Work to Ride" SI# 7.067 DoD#1930 PGP Key 0xBDED56C5
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