What does relief at source mean on pension contributions?

When paying into a pension scheme, there are essentially two ways you could receive your tax relief; through relief at source or via a net pay arrangement. Relief at source means if you’re a basic rate taxpayer, you don’t need to do anything to get the tax relief paid into your pension. It will happen automatically. 

Your employer will take your pension contribution from your salary after you have paid income tax and employee’s national insurance contributions. The pension provider then adds basic rate tax relief to your pension pot.  

If you are a higher or additional rate taxpayer in England, Wales or Northern Ireland you can claim the additional relief up to your actual tax rate back via your self-assessment tax return. If you are a higher or top rate taxpayer in Scotland, this also applies, 

Information on how tax relief works can be found here. 

 

Last updated 9 Jul 2025 | First published 9 Aug 2016

Share

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

---