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.
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 13.8% 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.
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.
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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.