HMRC has confirmed details of a pension tax 'claim back' scheme after a taxpayer raised concerns as their situation was changing. A taxpayer reached out on social media site X, formerly Twitter, with a question about pension contributions into a Self-Invested Personal Pension (SIPP).
Taxpayer Inquiry
The concerned taxpayer asked: 'Can I check the amount I enter in my submission for pensions is my contribution + basic rate tax refund via provider (from HMRC)?'
In response, HMRC stated: 'It takes 72 hours for an online return to be processed, you can go back in and amend after that time.' HMRC added: 'Yes, you gross up by the 20 per cent basic rate that the pension scheme claim back.'
Understanding SIPPs
Self-invested personal pensions (SIPPs) allow you to control the specific investments that make up your pension fund. You are able to choose the pension provider and can often decide how much and how often to pay in and how your money is invested, including if you want to manage it yourself.
You can usually start a SIPP from age 18, or open one on behalf of someone younger, often for a child or grandchild. You normally cannot start and pay into a SIPP after you reach age 75, unless you are transferring across an existing pension.
Further Clarification
The taxpayer then asked: 'Once it's been through that 72 hours, does processed mean checked or is that separate?'
HMRC explained: 'That's the initial checks, returns can always be subject to further checks, but usually the 72 hours is sufficient.'
You can have both a workplace pension from your employer and a SIPP, or any number of different pension types. If you have an employer, paying into their workplace pension is usually better than a self-invested personal pension, unless you want a separate pension alongside that one.
