Pension Tax Relief Calculator
Find out the actual cost of contributing to your pension after income tax relief and (for salary sacrifice) National Insurance savings.
Reviewed by Richard Ross · Last updated April 2026
How Pension Tax Relief Calculator works
Relief at source
With relief at source, you contribute from net (post-tax) pay. The pension provider claims basic rate (20%) tax relief from HMRC and adds it to your pot. If you are a higher or additional rate taxpayer, you can claim the extra relief via Self Assessment.
Salary sacrifice
With salary sacrifice, you give up gross salary, which reduces your NI as well as income tax. A £1,000 salary sacrifice saves you both 20% income tax (£200) and 8% employee NI (£80) — a net cost of only £720 for a £1,000 pension contribution. Your employer also saves 15% employer NI.
Net pay arrangement
Some workplace pensions use a net pay arrangement instead of relief at source. Contributions are made from gross salary before income tax is deducted — so tax relief is given automatically at your marginal rate. Non-taxpayers do not benefit from this method.
Annual allowance and limits on tax relief
Tax relief on pension contributions is only available up to the annual allowance of £60,000 (or 100% of earnings if lower) for 2025-26. Contributions above this receive no tax relief and are subject to an annual allowance charge at your marginal rate. Higher earners subject to the tapered annual allowance (threshold income over £200,000) may have a reduced allowance, down to a minimum of £10,000. Claims for higher and additional rate relief via Self Assessment must be made within four years of the end of the relevant tax year.
Scottish income tax and pension relief — band-by-band guide
Scottish taxpayers pay income tax at rates set by the Scottish Parliament. Under relief at source, the pension provider always claims 20% basic rate relief automatically — regardless of the taxpayer's actual Scottish rate. The interaction with each 2025-26 Scottish band is as follows: • Starter rate (19%): HMRC tops up contributions at 20%, which is 1% more than the actual rate paid. Scottish starter rate taxpayers receive a small bonus — this overclaim is not repaid and is widely considered a feature of the current system. • Scottish basic rate (20%): Relief is given at exactly the right rate automatically. No Self Assessment claim required. • Intermediate rate (21%): Provider claims 20% automatically. Taxpayers can claim the additional 1% (21% − 20%) via Self Assessment — worth £10 per £1,000 contributed. • Higher rate (42%): Provider claims 20% automatically. Taxpayers can claim the additional 22% (42% − 20%) via Self Assessment — worth £220 per £1,000 contributed. This is one of the most valuable unclaimed reliefs in the UK: a Scottish higher-rate taxpayer paying 42% who contributes £10,000 per year is owed £2,200 per year from HMRC. • Advanced rate (45%): Can claim 25% extra via SA — £250 per £1,000 contributed. • Top rate (48%): Can claim 28% extra via SA — £280 per £1,000 contributed. Under a net pay arrangement, relief is given at the exact Scottish marginal rate automatically — no Self Assessment claim is needed. Scottish workers on salary sacrifice arrangements are not affected by the rate mismatch, as the contribution is taken from gross pay before any Scottish income tax applies.
Worked example: £5,000 contribution across three methods
Claiming higher-rate relief
Higher and additional rate taxpayers must claim extra relief above 20% via Self Assessment — HMRC does not pay it automatically.
Step-by-step guide: how to claim higher rate pension tax relief →Source: HMRC — Tax relief on pension contributions, GOV.UK (gov.uk/tax-on-your-private-pension/pension-tax-relief). Scottish Government — Income Tax rates and personal allowances (gov.scot).
Frequently asked questions
How does pension tax relief work?
For every £80 you contribute to a pension (relief at source), the government adds £20 in basic rate tax relief, giving you a £100 pension contribution. Higher rate taxpayers can claim a further £20 via Self Assessment, making the net cost £60.
What is salary sacrifice for pension?
Salary sacrifice means giving up gross pay in exchange for an employer pension contribution of the same amount. This reduces NI as well as income tax. A basic-rate taxpayer saves £28 per £100 sacrificed (20% tax + 8% NI) vs £20 with a personal contribution.
Do non-taxpayers get pension tax relief?
Under relief at source, non-taxpayers receive basic rate (20%) tax relief even though they pay no income tax. This is a government top-up. It does not apply to net pay arrangements.
How do I claim higher rate pension tax relief?
Higher rate (40%) and additional rate (45%) taxpayers must claim the extra relief above 20% via Self Assessment. HMRC does not automatically refund this — you must file a tax return or contact HMRC directly. Claims can be made up to four years after the end of the relevant tax year, so if you have been contributing for years without claiming, you may have unclaimed relief available.
Is there a limit on pension tax relief?
Yes. Tax relief is only available on contributions up to the annual allowance (£60,000 or 100% of earnings, whichever is lower). The money purchase annual allowance (MPAA) of £10,000 applies once you have flexibly accessed drawdown. Contributions above these limits are subject to an annual allowance charge that cancels out the tax relief.
What is a net pay arrangement?
Under a net pay arrangement, your employer deducts pension contributions before calculating income tax — so you automatically receive tax relief at your marginal rate. There is no need to claim via Self Assessment. However, non-taxpayers do not benefit: unlike relief at source, there is no top-up from HMRC for those with no tax liability. From April 2025, HMRC introduced a top-up payment for low earners in net pay schemes to address this inequity.
Can I carry forward unused annual allowance to get more tax relief?
Yes. You can carry forward unused annual allowance from the previous three tax years, allowing contributions above £60,000 in a single year while still receiving full tax relief. To use carry-forward: you must have been a pension scheme member in those prior years, and you must use the current year's full £60,000 first. A person with £20,000 unused in each of the last three years can contribute up to £120,000 in the current year (3 × £20,000 + current year £60,000).
Does my employer benefit from my salary sacrifice pension?
Yes. When you sacrifice salary, your employer pays NI on a lower gross wage. At the 2025-26 employer NI rate of 15%, a £200/month sacrifice saves the employer £30/month in NI (£360/year). Many employers pass some or all of this saving to the employee's pension — ask your HR or payroll team. This employer NI saving effectively means the government and employer between them fund part of your pension contribution on top of the income tax and employee NI savings.
How do I get pension tax relief if I am self-employed?
Self-employed people contribute to a personal pension, SIPP, or stakeholder pension and receive tax relief via "relief at source": you pay the net contribution, and the pension provider claims 20% basic rate relief from HMRC. If you pay higher or additional rate income tax, claim the extra relief through your Self Assessment tax return. Unlike employees, there is no employer contribution — you must fund the full amount yourself, but the tax relief is identical.
What happens to pension tax relief if I contribute more than I earn?
Tax relief is limited to 100% of your UK earnings in the tax year (or the annual allowance of £60,000, whichever is lower). If your earnings are £20,000, you can receive tax relief on up to £20,000 of contributions. Non-workers (with no earnings) can still contribute up to £2,880 net per year (£3,600 gross after basic rate relief) to a pension — a useful rule for non-working spouses, children, or those on career breaks.
Does a SIPP qualify for pension tax relief in the same way as a workplace pension?
Yes. A self-invested personal pension (SIPP) qualifies for exactly the same tax relief as any other personal pension. SIPPs use relief at source: you pay contributions from your net (after-tax) pay, and the SIPP provider claims 20% basic rate relief from HMRC and adds it to your pot. If you pay higher or additional rate income tax (40% or 45%), claim the extra relief via Self Assessment — the SIPP provider does not do this for you. SIPP contributions count towards the same annual allowance (£60,000) as all other pension contributions. Non-taxpayers can also contribute up to £2,880 net per year and still receive the 20% top-up.
How does relief at source work in practice — step by step?
Step 1: You pay your pension contribution from your net (after-tax) pay. For a £800 contribution from a basic-rate taxpayer, you pay £800. Step 2: Your pension provider claims 20% basic rate relief from HMRC — £200 in this example — and adds it to your pot. Your pot receives £1,000 total. Step 3: If you pay higher rate (40%) or additional rate (45%) income tax, you are entitled to further relief of £200 (for 40%) or £250 (for 45%) on the original £1,000 gross contribution. You claim this via Self Assessment. Step 4: The effective cost is £600 for a higher-rate taxpayer (40%) and £550 for an additional-rate taxpayer (45%) for every £1,000 in the pension. Under relief at source, Scottish starter rate taxpayers (19%) receive 20% relief automatically — 1% more than their marginal rate, which is not reclaimed.
How does Scottish income tax affect pension tax relief claims?
Under relief at source, Scottish taxpayers at the starter rate (19%) receive 20% relief automatically — 1% more than their marginal rate, which is not reclaimed. Scottish basic rate (20%) taxpayers receive exactly the right relief. Scottish intermediate rate (21%) taxpayers can claim 1% extra via Self Assessment. Scottish higher rate (42%) taxpayers can claim 22% extra — worth £220 per £1,000 contributed. Scottish advanced rate (45%) taxpayers can claim 25% extra (£250 per £1,000). Scottish top rate (48%) taxpayers can claim 28% extra (£280 per £1,000). Under a net pay arrangement, Scottish rates are applied automatically and no SA claim is needed. This is an estimate; your actual entitlement depends on your full income for the year.
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This calculator provides estimates for informational purposes only. It is not a substitute for personalised pension or financial advice. Speak to a regulated financial adviser before making pension decisions.