Tax

Pension Tax Relief Calculator UK — How Much Extra Do You Get?

Calculate the tax relief on your pension contributions. How relief at source and net pay work, and how to claim higher rate tax relief.

By PocketWise · · 4 min read

Tax information is based on HMRC rules for the 2026/27 tax year. Tax rules can change — always verify current rates at GOV.UK. This is not tax advice. Consider consulting a qualified tax adviser for your personal situation.

Pension tax relief is one of the most valuable benefits available — here’s how to calculate and maximise it.

How Tax Relief Works

The Basic Concept

What Happens Example
You contribute £80
Tax relief added £20 (20% basic rate)
Total in pension £100
Effective cost £80 for £100 saved

By Tax Band

Tax Band Rate £100 Costs You
Basic (20%) 20% relief £80
Higher (40%) 40% relief £60
Additional (45%) 45% relief £55
Scottish rates Vary Different

Two Relief Methods

Relief at Source

How It Works Process
Your contribution After tax (net)
Provider claims 20% basic rate
Higher rate? You claim extra
Most personal pensions Use this method

Net Pay Arrangement

How It Works Process
Contribution taken Before tax
Full relief Automatic
Any rate taxpayer Gets full relief
Most workplace pensions Use this

Which Do You Have?

Check Indication
Payslip Shows method
Pension statements Shows gross/net
HR Can confirm
Provider documents State method

Calculating Your Relief

Basic Rate Taxpayer

Contribution Relief (20%) Total Invested
£100/month £25 £125
£200/month £50 £250
£300/month £75 £375
£500/month £125 £625

Higher Rate Taxpayer

You Pay Basic Relief Extra 20% Total Relief In Pension
£80 £20 £20 £40 £100
£160 £40 £40 £80 £200
£240 £60 £60 £120 £300
£400 £100 £100 £200 £500

Additional Rate Taxpayer

You Pay Basic Relief Extra 25% Total Relief In Pension
£80 £20 £25 £45 £100
£160 £40 £50 £90 £200
£240 £60 £75 £135 £300

Annual Calculation Example

Higher Rate Taxpayer

Element Amount
Annual contribution (net) £4,800
Basic rate relief added £1,200
Gross contribution £6,000
Extra relief claimable £1,200
Actual cost to you £3,600
In your pension £6,000

Effective Rates

Tax Band £100 in Pension Costs
Basic (20%) £80
Higher (40%) £60
Additional (45%) £55

Annual Allowance

Contribution Limits

Limit Amount
Annual allowance £60,000
Or 100% of earnings
Whichever is lower Applies

Carry Forward

Rule Details
Unused allowance Carry forward 3 years
Must have been member In those years
Use oldest first Then subsequent

Example Carry Forward

Year Allowance Used Unused
2022/23 £40,000 £10,000 £30,000
2023/24 £60,000 £20,000 £40,000
2024/25 £60,000 £60,000 £0
2025/26 £60,000 - -
Available 25/26 £130,000

Tapered Annual Allowance

High Earners

Income Level Allowance Reduction
Under £260,000 None
£260,000-£360,000 Gradually reduces
Over £360,000 Minimum £10,000

Threshold Income and Adjusted Income

Income Type Calculation
Threshold income Taxable income minus pension contributions
Adjusted income Threshold + employer contributions
Both tested To determine taper

Taper Calculation

Adjusted Income Allowance
£260,000 £60,000
£280,000 £50,000
£300,000 £40,000
£320,000 £30,000
£340,000 £20,000
£360,000+ £10,000

How to Claim Higher Rate Relief

Through Self Assessment

Step Action
1 Complete tax return
2 Enter pension contributions
3 HMRC calculates relief
4 Refund or tax code adjusted

Through Tax Code

Method Process
Phone HMRC Request adjustment
Provide contribution details Amount and frequency
Code adjusted Receive relief monthly
More complex If contributions vary

What to Report

On Tax Return Box
Gross contributions After basic relief added
Relief at source amounts If using this method
Personal contributions Net pay asks differently

Employer Contributions

Additional Tax Efficiency

Benefit Details
No NI On employer contributions
Corporation tax relief For employer
No limit Beyond annual allowance

Salary Sacrifice

How It Works Impact
Reduce gross salary By contribution amount
Employer pays to pension Instead
You save Income tax and NI
Employer saves NI too

Salary Sacrifice Example

Element Before After Sacrifice
Gross salary £40,000 £36,000
Employer pension £0 £4,000
Your tax Higher Lower
Your NI Higher Lower
In pension Same Same or more

Scottish Tax Rates

Different Bands

Band Rate Relief
Starter (19%) 19% 19%
Basic (20%) 20% 20%
Intermediate (21%) 21% 21%
Higher (42%) 42% 42%
Advanced (45%) 45% 45%
Top (48%) 48% 48%

Claiming in Scotland

Note Details
Relief at source Still claims 20%
You claim difference Via Self Assessment
Intermediate taxpayer Claim extra 1%
Higher taxpayer Claim extra 22%

Common Scenarios

Employed, Workplace Pension (Net Pay)

What Happens Details
Contribution Before tax
Full relief Automatic
Nothing to claim Already received
Check payslip Confirms

Employed, Personal Pension (Relief at Source)

What Happens Details
Contribution Your net pay
20% added By provider
If higher rate Claim extra
Via Self Assessment Or tax code

Self-Employed

What Happens Details
Personal pension Usually relief at source
Claim via SATR Include contributions
Relief all rates Claimed together

Summary

Your Tax Rate £100 in Pension Costs
20% £80
40% £60
45% £55
Key Limits 2025/26
Annual allowance £60,000
Or 100% earnings Whichever lower
Carry forward 3 previous years
Tapered AA starts £260,000 income
Checklist Action
Know your scheme type Net pay or relief at source
Check if claiming Higher rate relief
Self Assessment Report contributions
Maximise contributions Within budget
Consider salary sacrifice If available

Sources

  1. HMRC — Tax on your pension