Pension tax relief calculator

Tax relief returns the Income Tax that money paid into a registered pension scheme would otherwise bear. The calculator finds the gross contribution and works out the year's Income Tax with and without it. It then names each part of the difference: what the pension provider adds, what is claimed from HMRC and what is saved through payroll. Last, it checks the total against the annual allowance.

With the starting figures, earnings of £60,000 and a net contribution of £4,000, the provider adds £1,000.00 and the pension receives £5,000.00. Income Tax for the year falls from £11,432.00 to £10,432.00, so a further £1,000.00 is claimed. Relief comes to £2,000.00, and the contribution costs the saver £3,000.00.

Relief at source means the saver pays from taxed income, net of the basic rate of 20%. The provider claims that 20% of the gross from HMRC, which is 25% of what was paid (Finance Act 2004, section 192). HMRC's Pensions Tax Manual, at PTM044220, works the same sum: £800 paid becomes £1,000 in the pension.

How much more comes back depends on the marginal rate, the rate on the top slice of income. The gross contribution widens the basic rate band and the higher rate band by its own size, so that much income drops a band. Cases worked to these rules, GOV.UK's own example among them, are in the reference cases.

Between 20% and 45% of the gross amount outside Scotland, matching the Income Tax it would have borne, and up to 60% where it restores lost Personal Allowance. A basic rate taxpayer gets 20%, the part that matches income taxed at the higher rate gets 40%, and the additional rate part 45%. Basic rate relief reaches the pension first. Higher rate relief and additional rate relief are the further 20% and 25%, which come back to the saver.

The figure follows the band of each pound. In England, Wales and Northern Ireland the higher rate starts at £50,270 of income in 2026 to 2027, and the additional rate at £125,140. A payment earns the higher figure only on the slice of the gross that lies above £50,270 of income. Relief is due on contributions up to the saver's earnings, or £3,600 gross for someone with little or none.

At £60,000 of earnings, £4,000 paid in brings £2,000.00 of relief, 40% of the £5,000.00 gross. Every row pays the same amount into a relief at source pension outside Scotland.

At £55,000, only £4,730 of income sits above the higher rate threshold, so the claim is £946.00 rather than the full 20% of the gross. At £150,000 the claim is £1,250.00, the 25% gap between the additional and basic rates. The £110,000 row reaches 60% because the contribution also gives back Personal Allowance, explained further down.

Three methods deliver the relief by different routes, and the payslip shows which one a scheme uses. A pension deduction taken before tax is a net pay arrangement. A deduction after tax, with the provider adding 25% to it, is relief at source. A lower salary, with the employer paying the pension, is salary sacrifice.

Relief at source is how personal pensions and a SIPP (self-invested personal pension) work, and so do many workplace pensions joined through auto-enrolment. It is the only method that gives a non-taxpayer something without a claim.

Under a net pay arrangement the employer takes the contribution from pay before Income Tax, so relief arrives at the marginal rate with nothing to claim. National Insurance is still worked on the full pay. A worker whose pay is below the Personal Allowance gets nothing this way, which is the gap the low earner's pension payment fills.

Salary sacrifice lowers the contracted pay, and the employer puts the same sum into the pension. Income Tax, employee National Insurance and any student loan repayment fall with the pay. Employee National Insurance in 2026 to 2027 is 8% on pay between £12,570 and £50,270 and 2% above, so the saving shrinks above the upper limit. The employer saves 15% above £5,000 a year and may or may not pass that on.

The National Insurance Contributions (Employer Pensions Contributions) Act 2026 changes this from 6 April 2029: sacrificed pension contributions above £2,000 a year become liable to National Insurance. Income Tax relief stays, and nothing changes in 2026 to 2027. The calculator flags a sacrifice above £2,000 but counts its full saving for this year.

For a basic rate earner on £40,000, a salary sacrifice of £2,000 costs £1,440.00 after relief, against £1,600.00 under the other two methods.

A Plan 2 student loan lifts the sacrifice saving to £740.00, since repayments fall by 9% of the sacrificed pay. On £60,000, a £5,000 sacrifice saves just £100.00 of National Insurance, while the employer saves £750.00. Take-home pay with every deduction comes from the salary calculator.

Through a Self Assessment tax return, or by contacting HMRC for someone who does not file one. The claim covers the gap between the basic rate the provider added and the saver's own rate. Only relief at source needs it, since the two payroll methods already give the full rate.

GOV.UK's pension tax relief page sets out the claim. It is an extra 20% up to the amount of income taxed at 40%, and 25% up to the amount taxed at 45%. On the return, relief at source payments go in the box for payments to registered pension schemes, and the relief is worked from the gross amount.

Without a return, the claim goes to the tax office by phone or letter. The relief then usually arrives as a change to the tax code or as a repayment. Either way it reaches the saver, not the pension.

HMRC publishes no relief calculator of its own. GOV.UK explains the rules, and this one applies them to a single person's figures for the year. In the readout, the claim appears as extra relief claimed from HMRC, apart from the provider's top-up.

Scottish taxpayers get the same 20% added at source whatever their band, and any extra follows the Scottish bands. GOV.UK's Scottish Income Tax page sets six rates for 2026 to 2027, from the 19% starter rate to the 48% top rate.

Starter rate taxpayers keep the full 20% although they pay only 19%: HMRC takes nothing back. At the intermediate rate of 21%, the extra is 1% on income taxed at that rate. Higher, advanced and top rate taxpayers claim 22%, 25% and 28% on the matching income. Under section 192(4A), the Scottish basic rate limit and every limit above it move up by the gross amount paid in; the starter rate limit does not.

On £50,000 of Scottish earnings, £4,000 paid in brings £2,100.00 of relief, £100.00 more than on the same pay elsewhere in the UK.

The intermediate rate claim stays small because it only reaches income actually taxed at 21%. At £40,000 the whole payment qualifies, worth £50.00. The nation switch in the calculator moves every band at once.

Two separate limits apply to a year's saving. Relief is due only on member contributions up to the higher of £3,600 gross and relevant UK earnings. All contributions, an employer's included, count towards the annual allowance of £60,000, which HMRC's pension schemes rates give for 2026 to 2027.

Relevant UK earnings are pay, self-employed profit and similar earned income, not rent, savings or dividends. With earnings of £10,000, a net payment of £9,600 would be £12,000 gross, more than the earnings. Only £10,000.00 gets relief, and £1,600.00 of the payment goes in without any.

A pension input above the allowance is not refused. The excess is taxed as an annual allowance charge at the saver's own rates, which a scheme may pay from the pension through Scheme Pays. Carry forward adds unused allowance from the three previous tax years, for someone who was a member of a registered pension scheme in each. The calculator takes that unused amount as a figure the saver has worked out, up to £180,000.

On £90,000 of earnings, £56,000 paid in becomes £70,000.00 gross, £10,000.00 over the allowance, with an estimated charge of £2,000.00. With £10,000 of unused allowance carried forward, nothing is over and no charge arises.

The tapered annual allowance applies only when threshold income is above £200,000 and adjusted income above £260,000. HMRC's Pensions Tax Manual, at PTM057100, then takes £1 off the allowance for every £2 of adjusted income above £260,000, down to £10,000, reached at £360,000. On £300,000 of earnings the allowance is £40,000.00.

After a pension has been flexibly accessed, such as by drawing taxable income from a drawdown fund, the money purchase annual allowance of £10,000 applies to money purchase saving instead. Carry forward cannot be used against it, so the calculator hides that field once the answer is yes.

Adjusted net income is total income, before allowances, less gross relief at source contributions and some other reliefs (Income Tax Act 2007, section 58). A contribution that lowers it can change two things beyond the tax bands. The payroll methods lower it too, because they lower taxable pay.

The Personal Allowance of £12,570 falls by £1 for every £2 of adjusted net income above £100,000, and has gone at £125,140. Outside Scotland, income in that range is taxed at an effective 60%. A gross contribution that brings adjusted net income back towards £100,000 restores allowance as well as moving income out of the higher rate.

With £110,000 of earnings, £8,000 paid in is £10,000.00 gross. Adjusted net income falls to £100,000.00, the allowance rises from £7,570.00 to £12,570.00, and the claim is £4,000.00 on top of £2,000.00 added at source, 60% in all. The tax on a bonus that lifts pay into this range comes from the bonus tax calculator.

GOV.UK's page on the High Income Child Benefit Charge sets out how it works. The charge takes back 1% of Child Benefit for every £200 of adjusted net income above £60,000, and all of it from £80,000. The calculator counts 52 weeks of Child Benefit at the 2026 to 2027 weekly rates of £27.05 for the eldest child and £17.90 for each other child.

On £70,000 with one child, £8,000 paid in takes adjusted net income to £60,000.00, so the £703.00 charge disappears. Total relief becomes £4,703.00, 47% of the gross. A plan to assess the charge on household income was dropped at the Autumn Budget 2024, so each person's own adjusted net income still decides it.

Under net pay, a worker earning £10,000 who pays £500 from pay saves no Income Tax, because the pay is already below the Personal Allowance. The low earner's pension payment (Finance Act 2004, section 193A) makes up the difference to the relief at source amount after the year ends.

The tax office contacts the people due a low earner's pension payment itself, and the first payments, for 2024 to 2025, are due from late 2026. The calculator shows £100.00 for this case as an estimate, not the official figure. A relief at source scheme, by contrast, adds £720 to a payment of £2,880 even with no earnings at all.

This pension tax relief calculator covers one person and the 2026 to 2027 tax year. Several things that change a real result stay outside it.

• Savings interest and dividends, which have rates of their own; other income is taxed here at the main rates.
• Defined benefit pensions, lump sums, and paying a charge through Scheme Pays.
• Child Benefit for fewer than 52 weeks, and the exact amount of a low earner's payment.
• Other reliefs that also change the bands or adjusted net income, such as Gift Aid.
• How far back a claim for an earlier year may go, and any change announced in the Budget on 28 October 2026.