Help Centre for Employers

What do I do if I have calculated the incorrect tax relief on employee pension contributions?

There are two ways pension providers normally calculate tax relief on pension contributions – net pay and relief at source.

The net pay arrangement which NOW: Pensions operates means that employers do not need to deduct any tax from their employees’ pension contributions as it is deducted from gross pay (before tax is calculated).

Please check that where your payroll software offers the choice of net pay and relief at source, that you have selected the net pay option as this is the only way that NOW: Pensions operates.
If you are currently, or have in the past, paid contributions across to NOW: Pensions on the wrong tax relief basis i.e. relief at source, you will have underpaid us for contributions and overpaid tax to HMRC and you will need to rectify this immediately.

• The underpayment of contributions should be aggregated as a single payment on the file you import to us in the AVC column.
• Overpayments of PAYE tax must be resolved directly with HMRC.
• As pension payments will have been underpaid, we recommend that you advise The Pensions Regulator of this error and confirm to them the steps that you will be taking to rectify it.

“We were impressed with the simplicity of its scheme. The ease of implementation was also a big plus for us and has removed much of the administrative headache.” — Neil Tune, HR director at Fitness First
I've known ATP for many years and have enormous respect for the effectiveness of their investment strategy. I'm convinced that NOW: Pensions can become a major player in the UK and look forward to being a part of that success. — Chris Daykin, the former Government Actuary
I am backing NOW: Pensions, the ATP project, because I believe it will encourage transparency, low costs and decent returns for millions of British employees. — Nigel Waterson, former Shadow Pensions Minister
I firmly believe in NOW: Pensions' principle that everyone deserves the right to a better retirement. I look forward to being part of the team which aims to achieve this in the UK. — Win Robbins, former Head of European Fixed Income Barclays Global Investors
ATP comes to the UK pensions world with the highest commendations from the Danish trade unions, employers and government. NOW: Pensions' offering in the UK will be high quality, low cost, and honest and I'm proud to be associated with it. — John Monks, member of House of Lords and former General Secretary of ETUC and TUC