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Investing · Marginal-rate relief

Pension Tax Relief Calculator

UK pension contributions get tax relief at your marginal rate. Basic-rate relief lands automatically. Higher and additional-rate taxpayers have to claim the extra via Self Assessment — and many forget.

£

Net cost to you

£3,600

For £6,000 in your pension.

Tax relief breakdown

  • Gross contribution
    £6,000
  • Basic-rate relief (auto, into pot)
    £1,200
  • Extra relief via Self Assessment
    Refunded into your bank or via tax code
    £1,200
  • Net cost
    £3,600

How we calculated your result

For a gross contribution of £X, you actually pay £X × 80% (relief at source). HMRC tops up the other 20% into the pot. If you’re a 40% taxpayer, you claim a further 20% refund through Self Assessment — making a £100 pension contribution cost you only £60.

Official UK rules in simple English

  • Basic-rate relief (20%) added automatically by provider.
  • 40% / 45% taxpayers claim the extra 20% / 25% via Self Assessment.
  • Annual Allowance: £60,000 (2025/26).
  • Tapered allowance kicks in over £260k adjusted income.

Common pitfalls to watch out for

  • ⚠ Higher-rate relief is opt-in

    Around £1bn/year is unclaimed by higher-rate taxpayers who don’t complete Self Assessment.

  • ⚠ Net pay scheme = no extra claim

    Some workplace schemes (net pay) deduct gross from salary — your relief is automatic at marginal rate, nothing to claim.

  • ⚠ Carry forward 3 years

    Unused allowance from the previous 3 tax years can be used if you have the earnings to support it.

Frequently asked questions

Salary sacrifice or personal?
Salary sacrifice saves you 8% NI on top of the income tax relief — better deal for most.
Can a non-taxpayer contribute?
Yes — up to £3,600 gross/year with 20% relief still added (£2,880 net).

Educational. Consider regulated advice before making large pension contributions.

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