Pension Tax Relief Calculator
See how much tax relief you get on your pension contributions. Understand the true cost of saving for retirement with government incentives.
Your Details
Your total yearly earnings before tax
The amount you contribute each month
How your pension contributions are made
Your Tax Band
Basic Rate (20%)
Based on your annual salary of £45,000
Your Tax Relief
Total Tax Benefit
£900
20% effective relief
Your Net Cost
£3,600
What you actually pay
Goes Into Your Pension
£4,500
Gross contribution
Tax Benefit Breakdown
Where Your Money Comes From
For every £1 you contribute, £1.25 goes into your pension
That's a 20% boost from tax relief
Unlock Your Full Results
Enter your email to see your complete personalised projection
Tax relief is subject to annual allowance limits. Higher and additional rate relief must be claimed via self-assessment. This calculator provides estimates based on 2024/25 tax rates.
How to Use This Pension Tax Relief Calculator
This pension tax relief calculator helps you understand how much the government contributes to your pension through tax relief. Follow these steps to calculate your personal tax benefit:
Enter Your Annual Salary
Input your gross annual salary before tax. This determines your tax band and therefore how much tax relief you receive. Include bonuses and other regular income if they are part of your pensionable salary.
Enter Your Monthly Pension Contribution
Input how much you contribute to your pension each month. For workplace pensions with relief at source, enter the amount deducted from your pay. For salary sacrifice, enter the amount being sacrificed.
Select Your Pension Type
Choose how your pension contributions are made. This affects how tax relief is applied: relief at source adds 20% automatically, salary sacrifice saves tax before it is deducted, and SIPPs require you to claim relief.
Review Your Tax Benefits
The calculator shows your total tax benefit, including basic rate relief, higher rate relief (if applicable), and National Insurance savings for salary sacrifice. It also shows the effective cost to you versus what goes into your pension.
Understanding Pension Tax Relief in the UK
Pension tax relief is a government incentive that reduces the cost of saving for retirement. When you contribute to a pension, you receive tax relief at your marginal rate of income tax, effectively meaning the government adds money to your pension pot.
How Tax Relief Works
The principle is simple: pension contributions come from untaxed income. If you are a basic rate taxpayer paying 20% tax, for every £80 you contribute from your take-home pay, £100 goes into your pension. The government adds the £20 you would have paid in tax.
For higher rate taxpayers (40%), a £100 pension contribution effectively costs only £60 of take-home pay. Additional rate taxpayers (45%) pay just £55 for every £100 in their pension.
Relief at Source
Most workplace pensions and personal pensions use relief at source. Your contribution is taken from your pay after tax, but your pension provider claims basic rate (20%) relief from HMRC and adds it to your pot automatically.
If you are a higher rate (40%) or additional rate (45%) taxpayer, you must claim the extra relief through your self-assessment tax return. This extra relief comes as a reduction in your tax bill or a refund, not as an addition to your pension pot.
Salary Sacrifice
With salary sacrifice, you agree to reduce your salary by the amount of your pension contribution. Your employer then pays this amount directly into your pension. Because your salary is lower, you pay less income tax AND less National Insurance - providing additional savings beyond standard tax relief.
The NI savings are significant: 12% on earnings between £12,570 and £50,270, and 2% above that. Your employer also saves their 13.8% NI contribution, which good employers pass on to boost your pension.
Net Pay Arrangements
Some public sector and older workplace schemes use net pay arrangements. Here, your contribution is deducted from your salary before tax is calculated, so you get full relief automatically regardless of your tax band. No claiming required.
Annual Allowance
There is a limit to how much tax relief you can receive each year. For 2024/25, the annual allowance is £60,000 or 100% of your UK earnings, whichever is lower. Contributions above this limit receive no tax relief and may incur an annual allowance charge.
If you have accessed your pension flexibly (through drawdown or taking taxable cash), your annual allowance for money purchase pensions reduces to £10,000 - the Money Purchase Annual Allowance (MPAA).
Tapered Annual Allowance
High earners face a reduced annual allowance. If your threshold income (broadly, taxable income before pension relief) exceeds £200,000 AND your adjusted income (including pension contributions) exceeds £260,000, your allowance is tapered. It reduces by £1 for every £2 of adjusted income over £260,000, down to a minimum of £10,000.
Key Factors That Affect Your Pension Tax Relief
Several factors determine how much tax relief you receive on your pension contributions:
Your Tax Band
The higher your marginal tax rate, the more tax relief you receive. Basic rate taxpayers get 20% relief, higher rate taxpayers get 40%, and additional rate taxpayers get 45%. Your tax band is based on your taxable income after deductions.
Pension Scheme Type
How relief is applied depends on your pension type. Relief at source adds 20% automatically with extra to claim. Salary sacrifice saves tax and NI upfront. Net pay deducts contributions before tax. SIPPs use relief at source.
National Insurance Status
For salary sacrifice pensions, you also save National Insurance contributions. This adds 12% (or 2% for higher earners) to your tax savings, making salary sacrifice the most tax-efficient option for many people.
Annual Allowance
You can only get tax relief up to your annual allowance (£60,000 or your earnings, whichever is lower). Exceeding this creates a tax charge. High earners may have a reduced tapered allowance.
Carry Forward Rules
If you have not used your full annual allowance in the previous three tax years, you can carry forward the unused amount. This is useful for making large one-off contributions.
Scottish Tax Rates
Scottish taxpayers have different income tax bands. If you pay Scottish income tax, your tax relief is based on Scottish rates, which can result in different relief amounts than the rest of the UK.
Tips to Maximise Your Pension Tax Relief
Always Claim Higher Rate Relief
If you pay higher or additional rate tax and your pension uses relief at source, you must claim the extra relief through self-assessment. Many people miss this - it could be worth hundreds or thousands of pounds each year. You can claim for the current year and the previous four tax years.
Consider Salary Sacrifice If Available
If your employer offers salary sacrifice for pension contributions, consider using it. The National Insurance savings (up to 12%) significantly boost the value of your contributions. Some employers also pass on their NI savings, increasing your pension even further.
Use Carry Forward for Lump Sum Contributions
If you receive a bonus, inheritance, or other windfall, you may be able to make a large pension contribution using unused annual allowance from the previous three years. This can provide substantial tax relief while significantly boosting your retirement savings.
Time Contributions Around Tax Band Boundaries
If you are close to a tax band threshold, increasing pension contributions can reduce your taxable income below the threshold. This is particularly valuable near the £100,000 threshold where the personal allowance starts to be withdrawn, or £50,270 for higher rate tax.
Avoid the Personal Allowance Trap
For every £2 you earn over £100,000, you lose £1 of personal allowance. This creates an effective 60% tax rate between £100,000 and £125,140. Making pension contributions to reduce your income below £100,000 effectively gets 60% tax relief - an exceptional return.
Make Contributions Before Year End
To claim tax relief for a specific tax year, contributions must reach your pension by 5 April. Allowing time for processing, make any lump sum contributions by mid-March. Remember that tax relief claims for pension contributions can only be made within four years of the end of the tax year.
Frequently Asked Questions
If your pension uses relief at source (most workplace and personal pensions), you need to claim higher rate relief through a self-assessment tax return. Enter your total pension contributions (including the basic rate relief already added) in the pension contributions section. HMRC will calculate the additional relief owed and either reduce your tax bill or issue a refund. You can also claim by contacting HMRC if you do not normally complete a tax return.
With relief at source, your contribution is taken from your salary after tax, then your pension provider adds 20% tax relief. With salary sacrifice, you agree to a lower salary and your employer pays the difference into your pension before any tax is applied. Salary sacrifice is usually more efficient because you also save National Insurance contributions. However, it may affect benefits linked to your salary, such as mortgage borrowing capacity or statutory payments.
Yes, even non-taxpayers receive basic rate tax relief on pension contributions up to £2,880 per year (which becomes £3,600 in your pension). This applies to children, non-working spouses, and anyone whose income is below the personal allowance. It makes pensions an excellent savings vehicle even for those not paying income tax.
For 2024/25, the annual allowance is £60,000 or 100% of your UK earnings, whichever is lower. This is the total amount of pension contributions (including employer contributions) that can receive tax relief in a tax year. High earners with adjusted income over £260,000 may have a reduced tapered allowance, down to a minimum of £10,000.
Yes, pension contributions effectively reduce your taxable income. This is particularly valuable if it moves you into a lower tax band or if you earn between £100,000 and £125,140, where you lose your personal allowance. For salary sacrifice, the reduction is automatic. For relief at source, your basic rate band is extended by the gross contribution amount, so higher rate relief comes as a tax reduction rather than a direct income reduction.