Tax relief on pension contributions

The current pension rules allow you to make contributions to a registered pension scheme and receive tax relief.

You can pay as much as you like into your pension, but there is a limit on how much tax relief you will receive. You will only benefit from tax relief on the lower of 100% of net relevant earnings or the annual allowance. You must be under 75 to receive tax relief. 

The standard annual allowance is currently £60,000, but this is reduced if, for instance, you have: 

• accessed your pension savings 
• earned over £200,000 threshold income 
• earned over £260,000 adjusted income 

The tax relief that you receive by investing into a pension depends on your tax rate. Contributions to personal pension schemes are paid net of basic rate income tax, so if you are a basic rate taxpayer, you pay 80% of the gross contribution and your pension fund receive 20% tax relief from the Government. 

England, Wales and Northern Ireland 

If you are a higher or additional rate taxpayer (England, Wales or Northern Ireland), in addition to the 20% relief that you receive at source, you can also claim a further 20% or 25% tax relief through submission of your self-assessment tax return. 

Scotland 

Scottish taxpayers also receive 20% tax relief at source for personal pension contributions. If you are an intermediate, higher, advanced or top rate taxpayer you can claim additional relief through your self-assessment tax return. 

Starter rate taxpayers (currently 19%) still receive 20% tax relief. 

If you have adjusted income of over £260,000 and threshold income of over £200,000 then your annual allowance will be tapered by £1 for every £2 you earn above £260,000. 

Last updated 10 Apr 2026 | First published 5 Dec 2012

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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.

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