Tax Allowances: Occupational Pensions

Department for Work and Pensions written question – answered on 17th June 2019.

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Photo of Stephen Timms Stephen Timms Labour, East Ham

To ask the Secretary of State for Work and Pensions, whether universal credit claimants are able to deduct the tax relief claimed by relief at source pension schemes from their earned income figure to calculate their award of universal credit.

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

100% of contributions to employer pension schemes, whether Net or Relief at Source pensions, will be taken into account when calculating the level of employed earnings in UC. This means that a UC claimant that contributes to either type of pension will, automatically (where employers report the information correctly), have their UC entitlement calculated on their taxable pay, after their pension contribution. This ensures fairness for all affected UC employed claimants.

If there is some discrepancy in the way in which it’s reported, DWP will manually ensure that the Relief at Source pension contribution is deducted before any UC entitlement is calculated on their employed earnings.

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