{"id":22161,"date":"2022-08-18T09:04:07","date_gmt":"2022-08-18T09:04:07","guid":{"rendered":"https:\/\/smh.group\/?p=22161"},"modified":"2023-02-15T13:39:49","modified_gmt":"2023-02-15T13:39:49","slug":"pension-top-up-payments-for-lower-paid-employees","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/pension-top-up-payments-for-lower-paid-employees\/","title":{"rendered":"Top-ups for lower-paid employees&#8217; pensions"},"content":{"rendered":"<p><strong>Employees who contribute to an occupational pension scheme under a net pay arrangement do not currently benefit from any tax relief if their earnings are below the personal allowance. This anomaly will be rectified from 6 April 2024 when HMRC will start making top-up payments.<\/strong><\/p>\n<p>A net pay arrangement is where pension contributions are deducted from pay before tax is calculated. The anomaly arises because someone in a similar situation, but making contributions with relief given at source, benefits from 20% relief. The change will mean low earners benefiting from the same tax relief regardless of earnings.<\/p>\n<h2><strong>Top-up payments<\/strong><\/h2>\n<p>HMRC\u2019s top-up payments will be introduced from tax year 2024\/25 onwards, with the top up not paid until after the end of the tax year. The implementation delay is due to the significant HMRC system changes required.<\/p>\n<ul>\n<li>The intention is that HMRC will notify those who are eligible and invite them to provide the necessary details for the top-up to be paid direct to their bank account. The requirement to claim the top-up, however, runs the risk of non-take up.<\/li>\n<li>As an example, someone qualifying with savings of \u00a3500 into an occupational pension scheme for a tax year should receive a subsequent top-up from HMRC of \u00a3500 at 20% = \u00a3100. The same rate will apply for Scottish taxpayers.<\/li>\n<li>If part of a person\u2019s pension savings already benefits from tax relief due to earnings exceeding the personal allowance, a top-up payment can still be given for the proportion not benefiting.<\/li>\n<li>Top-ups will be taxable, although this will not mean any additional income tax for many recipients given their level of earnings.<\/li>\n<\/ul>\n<p>Although top-ups are only estimated to be an average of just over \u00a350 a year, more than a million employees should benefit \u2013 the vast majority of them women.<\/p>\n<p>To sort out your <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/retirement-solutions\/\"><strong>pension plans<\/strong><\/a>, contact our <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/\"><strong>Sheffield based Financial Advisers<\/strong><\/a>\u00a0on\u00a0<strong>0114 266 4432<\/strong>\u00a0or\u00a0<a href=\"mailto:info@smhca.co.uk\"><strong>info@smhca.co.uk<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Employees who contribute to an occupational pension scheme under a net pay arrangement do not currently benefit from any tax relief if their earnings are below the personal allowance. This anomaly will be rectified from 6 April 2024 when HMRC will start making top-up payments.<\/p>\n","protected":false},"author":4,"featured_media":21801,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3],"tags":[83,98,77,11,79,932],"class_list":["post-22161","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","tag-chartered-accountants","tag-financial-advice","tag-financial-planning","tag-hmrc","tag-pension","tag-top-up"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Top-ups for lower-paid employees&#039; pensions - Financal advisers in Sheffield - SMH Group<\/title>\n<meta name=\"description\" content=\"Employees who contribute to an occupational pension scheme under a net pay arrangement do not currently benefit from any tax relief if their earnings are below the personal allowance.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Top-ups for lower-paid employees&#039; 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