View Full Version : Unused Allowances

2nd January 2004, 19:51
I have just been filling out my tax return online and I have a query.

Last tax year I only received DSS benefit to a taxable total less than a single persons allowance. However, I continued to contribute to a personal pension at £100 per month.

Since my taxable total is less than my allowances, as far as I can see, I have not received any tax relief on the pension payments. Obvious really.

Do I carry these back to the preceeding year or what? Pretty sure if doubled contributions for preceding year would not exceed allowable percentage.

Any pointers appreciated.

4th January 2004, 22:02
Eh? Obvious? Tax relief on personal pension payments from your net salary is a refund of the tax you have paid, it gets added back to your pension payments. If you have not paid any tax then how can you get tax relief?

Not really sure though, OH. I might be talking total bulwarks.

PS Isn't filling in a tax return online just such marvellous fun??? Did mine a few days ago and I have been on cloud nine ever since.

5th January 2004, 11:36
Read the notes on the tax return. That makes it so clear as to be completely opaque.

If it is a personal pension I think the provider reclaims, i.e. you pay £100 and they get a further £25 odd from the revenue.

Claiming relief on your tax return is only for higher rate relief (now abolished?) and for certain old contracts that had gross payments (e.g. S226 retirement annuitys).

If you have a personal pension and have been reclaiming tax relief on the premia via your tax return this could be an error.

Speak to you tax office, they will (normally) be helpful.

If you are able to control it you should check whether you personally paying the contributions is the best way of doing so. In general it is likely to be more efficient for your company to pay them - it will get CT relief and this also gets them out of the NI net.

5th January 2004, 12:08
I just happen to be one of those with a pre 1988 annuity contract for which you claim the relief through your tax return/paye code.

If the notes are opaque as you say then I make use of previous year's unused allowances.

Any accountants wish to comment.

I agree that using the company to pay the contributions may be more tax efficient but my pension has been in place far longer than the company. Intention was to start second pension run through the company. Long period on bench put pay to that.

By the way, I believe non-tax payers can now claim basic rate tax relief on stakeholder pensions. Correct me if I'm wrong.

Have to admit that I have been impressed with the online tax return system. Not much else has!

5th January 2004, 12:37
I also have an S226 contract, however it has been paid up for some years.

Assuming you are under 50 your relief for last year is 17.5% of your income. Any payments in excess of this will have to be carried back to the previous year in order to get relief - if you have spare relief avaialble from that year. Relief is always given in the year of payment. I cannot remember if this is one of those things that is only allowed against actual tax paid - but I believe not. It should become apparent from the calculation when you fill in your online return.

Re stakeholders and tax relief yes you are correct, although it is not claimed by the (non) taxpayer, it is claimed by the provider. However, if payments above £3,600 p.a. are made then it is subject to a funding check.

I beleive this is also the case with a personal pension now as well.

5th January 2004, 13:10
Please excuse my ignorance but I don't things are as obvious to the layman as might be perceived. Plus, I'm a typical software engineer who wants everything crystal clear.

If it is possible for the provider to claim a supplement equivalent to basic rate times contributions for personal/stakeholder pensions then, surely, contributors to annuity contracts can claim the equivalent amount? I'm expecting to see a refund on my tax return equivalent to basic rate times £1200.

When I tried first time the other night I showed the pension contributions as relevant to 2002-2003 and did not see any refund, not even 17.5% of the supposed taxable income I received from the DSS.

I definitely did not use my full 17.5% during 2001-2002 hence I will try putting the £1200 into that year and see what happens. Will of course try to get an answer from the helpline at the same time.

I'm reluctant to speak to accountant because his costs will exceed any relief I may obtain. Note to self - must compose email to new accoutant asap.

5th January 2004, 13:44

That makes it so clear as to be completely opaque.

You must have misread that, I was not trying to imply it was clear, quite the reverse in fact.

I'm expecting to see a refund on my tax return equivalent to basic rate times £1200.

Relief for retirement annuity contracts is given through tax code - looking back through my files this appears to be how I got mine.

The problem with this is that you are basically fsked if you have no/little income.

You are in the position of having taxable income of (say) 4,000 and allowances of (say) 4,615 + 1,200. (700 for 4,000 x 17.5% + 500 from unused relief in previous year). You lose the relief because you do not have the appropriate income.

This does not compare favoroubly with the situation with a personal pension or a stakeholder - but that is irrelevant the law for pre-1988 contracts was different.

I am quite sure the above is not what you want to hear - so it would be wise to check it with either the helpline on 0845 900 0444 or your local tax office. Please let me know if I am wrong.

5th January 2004, 13:55
God, I hate explorer on the PC. Just lost my reply. Right try again.

Sorry ABS, will use my glasses and read more slowly in future.

Agree about tax code. That was how I normally received the relief but last year the DSS was in control and set my tax code at the single person's allowance.

Have just checked IR330 and there is the following under annuity contracts:
You can elect to carry back all or part of any payment made in the tax year 2002-03 to the previous tax year, 2001-02, but you must have relief available in 2001-02 and relevant earnings to absorb it.
If you had no net relevant earnings in the tax year 2001-02 then you can carry back your 2002-03 payment (or part of it) to the tax year 2000-01. Again, you must have relief available in 2000-01 and relevant earnings to absorb the carried back payment.

Will let you know outcome when resolved.

8th January 2004, 10:08
Thus far it looks as though I'm right in trying to carry back last year's payments to the preceeding year when I didn't use up my full 17.5% allowances.

You make an entry in the relevant box (think it is 14.3) and this is a signal to the tax office for a human to do some calcs and authorise a repayment.

I think you can work out how much you think you are owed and put it somewhere else on the form but a human will still have to check what you have put.

You can phone up your tax office and they will put a note on your records that your tax return needs to be checked.

So, will submit tonight and see what happens. What's the betting I will have to make a phone call in a couple of months?

18th January 2004, 19:34
One week after sumitting tax return I have received a £481 refund.

Praise be to the tax man. Well, for one day anyway.