Member and employer pension contributions—tax relief
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Member and employer pension contributions—tax relief

The following Pensions practice note produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Member and employer pension contributions—tax relief
  • Member contributions to registered pension schemes
  • Section 188 income tax relief
  • National insurance contributions—Class 1
  • Tax charges on contributions above a certain amount
  • Tax treatment of member contributions in specie
  • Limited availability of income tax relief
  • What about contributions in specie made in payment of a money debt?
  • How is income tax relief claimed in respect of member contributions?
  • Relief at source
  • More...

Member and employer pension contributions—tax relief

FORTHCOMING DEVELOPMENT: As promised in the Spring Budget 2020 (held on 11 March 2020), on 21 July 2020 HM Treasury launched a call for evidence seeking evidence on the operation of both the main methods of administering pensions tax relief and what improvements might be made. The main issue (which is sometimes referred to as the ‘net pay anomaly’) centres around the fact that low earners saving in a pension may end up in differing financial positions depending on the scheme’s method of pensions tax relief. More specifically, lower earners who are in a net pay scheme have their contributions taken out of their pay before tax is calculated. If their remaining pay after their pension contribution is below the personal allowance, then they do not receive the same top-up that lower earners in relief-at-source (RAS) schemes receive. The RAS scheme assumes that the individual will have paid at least basic rate tax on all of their pension contribution, whereas this individual in the net pay scheme would only have paid basic rate on part (or even none) of their pension contribution had it been taxed as income. Lower earners in a net pay scheme do not receive the top-up that lower earners in RAS schemes receive. This creates a difference in tax treatment

Popular documents