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Flexiplan AVC lump sum overpayment

14 Feb 2017, 23:38

I recently paid a lump sum into my Flexiplan account on the basis of a quote from the pension dept in Sheffield. I've found out that I paid roughly 6k in that I will be unable to get relief on. If my sell my shares now, will the tax be refunded or does its SIPP status prevent that. Many thanks, there's a fair chance I'll be leaving before October 18 anyway.

Flexiplan AVC lump sum overpayment

15 Feb 2017, 16:21

Pension rules allow you to put in as much into your pension/s as you want, but you only get tax relief on an amount equal to what you earn, up to a max of £40k per year. So there’s no real point in putting in any more.
However I believe it’s possible to carry over unused allowances from the previous 3 years, so all may not be lost.

Your free RM shares are held in a Share Incentive Plan(SIP) and only become tax free after you’ve held them for 5 years, unless you’re a good leaver. You can’t avoid paying tax when selling your shares early because you’ve paid too much into your pension.

Flexiplan AVC lump sum overpayment

16 Feb 2017, 10:57

Thanks Robert for your reply. This overpayment into my Flexiplan does rankle. I suppose after my prolonged PSE saga with Sheffield, I am at fault for taking what I was told at face value. Do I have any redress, if the Royal Mail Pensions helpline give me a lump sum figure on which I can claim tax relief which turns out to be wrong. Can I claim the unused part of the lump sum back?
Looking forward, the saving in tax and NIC's on your weekly wage AVC contribution is a real positive. I just wish the pension dept at Sheffield would review and speed up their dealing with people who want to pay the maximum into their weekly AVC and still qualify for PSE. It took me a few months to arrive at the optimum amount, paying about £300 more in NIC's than I needed to.

Flexiplan AVC lump sum overpayment

16 Feb 2017, 11:47

It seems you have 3 options:

a. Bite the bullet and just keep the extra £6k in your AVC.
b. Try and get the £6k back. I would suggest contacting the trustees rather than the normal channels.
c. Investigate whether you can utilise any unused allowances from previous years: https://www.pensionsadvisoryservice.org ... ry-forward I assume you’ll have to contact HMRC?

Paying into a pension is a great way of saving money when you factor in the benefits of tax relief and salary sacrifice(PSE). I don’t know why more people don’t do it.

I think the pensions centre only quotes you the maximum you can pay into your pension/AVC’s in total, because if they factored in PSE it may be seen as giving financial advice.

Flexiplan AVC lump sum overpayment

16 Feb 2017, 22:19

I am struggling to understand what has gone on here with the size of the lump sum AVC you paid into the Flexiplan relative to earnings for the current tax year. Foxy, did RM provide you with a certicate for the lump sum you paid and have you sent it to HMRC and have they denied your claim for tax relief via a change to your PAYE tax coding ? I agree the Pensions Helpline are less than helpful, very vague and loathe to provide any 'information' that might potentially be construed as having been advice !

The size of the lump sum you paid must have been colossal relative to earnings for you not to have qualified for tax relief, given that we are close to the end of the tax year.

Resorting to selling your shares early to compensate is really not a good move !

Flexiplan AVC lump sum overpayment

17 Feb 2017, 20:59

Robert, thanks again for the clarity of your answer. I'll look into whether I can carry forward any unused allowance.
Nataddick, I sent a cheque for the lump sum quoted to Sheffield, who issued me with a tax certificate for that amount, which I forwarded on to HMRC. Three weeks later I got a full tax rebate in my wages and they changed my PAYE code. There is now a 8k disparity between my Assessable Pay and new PAYE tax code with 6 weeks left in the yr. It seems that if you ring up asking for a lump sum quote they do not check if you have been making AVC payments through your wages. My lousy pension knowledge added to the confusion, an embarrassing faux pas to be honest.

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