2. Pension contributions: tax relief

You automatically get tax relief on contributions to your own pension.

How you get the tax relief depends on the type of pension scheme you’re paying into.

Workplace pension schemes

Your employer may take pension contributions from your pay before they take Income Tax away. This is called a ‘net pay arrangement’.

So you don’t pay Income Tax on your pension contributions (but you do pay National Insurance contributions on them).

Not all workplace pensions use these arrangements - ask your employer if it applies to you.

Personal pensions

You’ve already paid tax on the income you pay into a personal pension.

For all personal pensions and some workplace pension schemes, your pension provider claims back Income Tax at the basic 20% rate and adds it to your pension pot. This is called a ‘relief at source’ arrangement.

This means for every £80 you pay into your pension, you end up with £100 in your pension pot.

If you pay Income Tax at the 40% rate, you can claim back the extra 20% tax you’ve paid on your pension contributions through your Self Assessment tax return if you fill one in each year.

If you don’t fill in a tax return, call or write to HM Revenue & Customs (HMRC) to reclaim the extra tax you’ve paid.

HMRC Income Tax enquiries
Telephone: 0300 200 3300
Textphone: 0300 200 3319
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
Find out about call charges.

HMRC
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX

If you pay Income Tax at the 45% rate, you can only claim the difference through your Self Assessment tax return.

Limits on tax relief for pension contributions

The maximum amount of pension contributions that you can get tax relief on in each tax year is the lowest of:

  • 100% of your income
  • £50,000

You pay Income Tax on any pension contributions you make above the limit.

If you don’t pay Income Tax

If you don’t pay Income Tax because you’re on a low income, you still automatically get tax relief at 20% on the first £3,600 you pay into a pension each tax year.

If you pay into someone else’s pension

If you pay into someone else’s pension, like your partner or spouse, they can get tax relief on your contributions instead of you.

They’ll automatically get the 20% tax relief added to their pension pot if the pension scheme is a ‘relief at source’ arrangement.

If it’s an occupational or workplace pension scheme, check the scheme’s rules. If it allows you to make contributions for other people, the person you’re paying for may need to claim the tax relief. They should write to or call HMRC.

HMRC
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX

HMRC Income Tax enquiries
Telephone: 0300 200 3300
Textphone: 0300 200 3319
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
Find out about call charges

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