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HMRC internal manual

Pensions Tax Manual

Contributions: tax relief for members: methods: introduction

Glossary PTM000001

There are three methods by which a member can receive tax relief on their relievable pension contributions:

  • member contributions to a pension scheme can be treated as amounts paid after deduction of the relevant rate of tax. The scheme administrator can then recover the tax relief at the relevant rate from HMRC on the member’s behalf and add it to the member’s pension fund.  This is called the relief at source (RAS) method of giving tax relief. Relief at source is regarded as the standard method of obtaining tax relief if the member has relevant UK earnings to tax of less than the basic amount of £3,600.  Further information on the relief at source method is at PTM044220.


  • where a member pays contributions to their employer’s occupational pension scheme, tax relief can be given automatically through the PAYE system.  Neither the member nor the scheme administrator needs to take any action.  The employer deducts the member’s contributions from their gross pay, before income tax is calculated on the balance, and passes the contributions to the scheme administrator or other designated body.  This is called the net pay arrangement method of giving tax relief and it enables the member to receive tax relief at their marginal rate of income tax. Further guidance on the net pay arrangement method is at PTM044230.


  • where a member makes gross contributions to a registered pension scheme, they can make a claim to HMRC to obtain the tax relief on the contribution.  The amount of the contribution is then relieved by being deducted from the member’s total income for the tax year in which the payment is made.  The deduction will be shown on the member’s Self-Assessment to give them the correct amount of tax relief. Further information on claims is at PTM044240.


A member cannot choose which method of tax relief applies to their contributions; this is determined by the method the pension scheme is allowed to operate under the legislation.