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HMRC internal manual

Pensions Tax Manual

Contributions: tax relief for members: methods: claims

Section 193(4) Finance Act 2004

There may be instances where insufficient relief has been given through the net pay arrangement because:

  • the amount of relievable pension contributions paid by a member to one or more pension schemes operating the net pay arrangement in a tax year is more than the employment income they receive from the sponsoring employer(s) for the tax year
  • it is not possible for the sponsoring employer or employers to deduct the whole amount of the contribution from the individual’s employment income.

In these circumstances a member may make a claim to obtain the balance of tax relief available on the contribution, generally via the Self-Assessment system.


Roger earns a basic gross salary of £24,000 per year and makes a monthly contribution of 10% of these earnings into his employer’s pension scheme via the net pay arrangement. He received a bonus of £2,000 at Christmas and just before his final month’s salary in the tax year is due he decides that the £2,000 should be paid into the scheme.

As Roger’s final month’s gross salary is £2,000, and the total monthly contribution will be £2,200, it will not be possible for the net pay arrangement to give him full relief. In these circumstances he can make a claim for the outstanding excess relief to be paid to him.