Paying into a pension is one of the most tax-efficient ways to save for your future, yet many people still don’t realise how generous pension tax relief can be. This is a simple reminder of how pension tax relief works, who can benefit, and what you need to do to make sure you’re not leaving money on the table.

What is pension tax relief?

Pension tax relief means the government adds money to your pension contributions. In most cases, for every £80 you pay into your pension, HMRC adds £20. This is known as basic rate tax relief and is automatically added to most personal and workplace pensions.

How much tax relief can you get?

• Basic rate taxpayers get 20% tax relief automatically
• Higher rate taxpayers can claim an extra 20% through their tax return
• Additional rate taxpayers can claim an extra 25% through their tax return

For example, if you are a higher rate taxpayer and contribute £8,000 into your pension, it is topped up to £10,000. You can then claim a further £2,000 back via your tax return.

Who can pay into a pension?

You can usually contribute up to the lower of:
• £60,000 per tax year (2024/25 onwards)
• 100% of your relevant earnings

Even if you have no earnings, you can still contribute up to £2,880 per year, which becomes £3,600 once tax relief is added. This is often used for non-working spouses.

Deadlines you need to know

To get pension tax relief for a tax year, contributions must usually be made by:
• 5 April for personal pensions
• Before payroll cut-off for workplace pensions

If you are a higher or additional rate taxpayer, you must also remember to claim the extra relief via your Self Assessment tax return.

Common mistakes we see

• Forgetting to claim higher rate tax relief
• Assuming relief is automatic for all taxpayers
• Missing the 5 April deadline
• Not using pension contributions to reduce a high tax bill

Why this matters

Pension contributions can reduce your income tax, help you keep your personal allowance, reduce child benefit charges, and lower your overall tax bill. It’s one of the few areas where tax planning and long-term savings work hand in hand.

Need help?

If you’re unsure how much you can contribute, whether you should top up your pension, or how to claim higher rate tax relief, getting advice before the tax year ends can make a real difference.

At Taxes Done Right Ltd, we help individuals and business owners make sure pension tax relief is claimed correctly and efficiently, as part of your wider tax planning.