Free calculator · 2026/27 rates
Pension contribution tax relief calculator
Pension contributions get tax relief at your highest rate of income tax: 20% for basic rate taxpayers, 40% for higher rate and 45% for additional rate, with Scottish rates from 19% to 48%. A £5,000 contribution costs a higher rate taxpayer £3,000. This calculator shows the relief, what to claim back and the real cost of paying in.
Your contribution
Gross amount, before any tax relief.
Minimum 3% of qualifying earnings under auto-enrolment.
Tax relief · 2026/27
Real cost to you
£1,800
Goes into your pension
£3,600
- Your gross contribution
- £2,250
- Employer contribution
- £1,350
- Income tax relief
- £450
- Added by provider
- £450
- To claim via tax return
- £0
- Effective relief rate
- 20%
- Your marginal tax rate
- 20%
Every £100 in your pension costs you £80.
How does pension tax relief work?
The rules give relief in one of three ways, and the way your scheme works decides what you have to claim. With relief at source you pay 80% of the contribution and the provider claims 20% from HMRC, whatever rate you pay; higher and additional rate taxpayers then claim the rest through Self Assessment. With a net pay scheme the contribution is taken before tax is calculated, so full relief is automatic. With salary sacrifice your salary is reduced and the employer pays the contribution, so you save National Insurance as well as tax.
| Taxpayer | Relief rate | Cost of £100 in the pension | Automatic? |
|---|---|---|---|
| Basic rate (20%) | 20% | £80 | Yes, all schemes |
| Higher rate (40%) | 40% | £60 | Net pay and salary sacrifice only |
| Additional rate (45%) | 45% | £55 | Net pay and salary sacrifice only |
| £100,000 to £125,140 (allowance taper) | 60% | £40 | Taper relief via tax return |
| Scottish higher rate (42%) | 42% | £58 | Net pay and salary sacrifice only |
Worked example: £5,000 into a SIPP on £60,000
You pay £4,000 into the SIPP and the provider adds £1,000, making £5,000. Because you are a 40% taxpayer your basic rate band is extended by £5,000, so £5,000 of income taxed at 40% is taxed at 20% instead, saving another £1,000 that you must claim from HMRC. Net cost £3,000, a relief rate of 40%.
The same contribution by salary sacrifice also saves £100 of employee NI, taking the net cost to £2,900, and your employer saves £750. A basic rate taxpayer putting £2,000 in pays £1,600.
What do people get wrong about pension relief?
- Not claiming higher rate relief. Millions of pounds go unclaimed each year because relief at source only adds 20% automatically.
- Contributing more than earnings. Relief is capped at 100% of relevant UK earnings (or £3,600 gross if you have none).
- Forgetting employer contributions count. The £60,000 annual allowance includes what your employer pays in.
- Salary sacrifice below minimum wage. Your reduced salary cannot fall under the National Minimum Wage, and a lower salary can affect mortgage applications and some benefits.
See the payslip effect in the take-home pay calculator, which supports all three scheme types.
Frequently asked questions
How does pension tax relief work?
Money paid into a pension is not taxed as income. A basic rate taxpayer gets 20% relief, so £100 in the pension costs £80. Higher rate taxpayers effectively get 40% relief and additional rate taxpayers 45%, but with relief at source schemes only the first 20% is automatic and the rest must be claimed from HMRC.
How do I claim higher rate pension tax relief?
If your scheme uses relief at source (personal pensions, SIPPs, NEST and some workplace schemes), claim the extra 20% or 25% through Self Assessment or by writing to HMRC to adjust your tax code. Net pay and salary sacrifice schemes give full relief automatically through payroll, so there is nothing to claim.
What is the pension annual allowance?
You can get tax relief on contributions up to £60,000 a year, including employer contributions, or 100% of your earnings if lower. Unused allowance from the previous three years can be carried forward. The allowance tapers down to £10,000 for people with adjusted income above £260,000.
Does salary sacrifice save National Insurance?
Yes. Because your salary is reduced before the contribution is made, you pay no employee NI on the sacrificed amount, saving 8% up to £50,270 and 2% above. Your employer saves 15% employer NI, and some employers add part of that saving to your pension.
Is pension tax relief different in Scotland?
Relief follows Scottish rates, so intermediate rate taxpayers get 21%, higher rate 42%, advanced rate 45% and top rate 48%. Relief at source schemes still add only 20% automatically; Scottish taxpayers paying 21% or more claim the extra through HMRC. Starter rate taxpayers at 19% still receive 20% at source and keep the difference.
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