Pension tax relief calculator
What a pension contribution costs after tax relief, including any band where relief exceeds the headline rate.
What it actually costs you
Estimate$4,000.00
60% effective relief on 10,000
- Total tax relief
- $6,000.00
- Claimed through your return
- $4,000.00
- Annual allowance
- $60,000
| Gross contribution | $10,000 |
|---|---|
| Basic rate relief at source | -$2,000.00 |
| Higher and additional rate relief | -$4,000.00 |
| Net cost to you | $4,000.00 |
- Part of this contribution falls in the £100,000 to £125,140 band, where relief is 60% because the contribution also restores personal allowance.
- Unused allowance from the previous three tax years can be carried forward.
At £110,000 a £10,000 contribution attracts 60% relief, costing £4,000, because it restores tapered allowance as well as reducing taxable income.
How this is calculated
How this is calculated
Relief can exceed the headline rate
Where an allowance is withdrawn as income rises, a contribution restores it as well as cutting taxable income. In the UK that produces 60% relief between £100,000 and £125,140 rather than the 40% the band table shows.
relief = marginal rate + rate on restored allowanceSome relief has to be claimed
UK providers add only basic rate relief automatically. The additional 20 to 40 points require a self assessment return, and a substantial amount goes unclaimed each year.
Sacrificing salary saves more than contributing
A personal contribution reduces income tax only. Reducing gross salary instead also avoids social contributions — 8% below £50,270 in the UK, worth £200 on a £10,000 contribution.
Worked example: £110,000 salary with a £10,000 pension contribution
| Salary | £110,000 |
|---|---|
| Contribution | £10,000 |
| Relief rate | 60% |
|---|---|
| Net cost | £4,000 |
Pension relief rules differ by country. Pick a country above for the treatment that applies to your scheme.
What this assumes
- A standard defined contribution scheme.
- Salary is the only income.
- Contribution within the annual allowance.
- National rates with no regional variation.
Where this commonly goes wrong
- Annual allowances often taper for high earners, and contributing past the reduced limit triggers a tax charge.
- Relief above the basic rate frequently requires a return, and unclaimed relief expires after a few years.
- Drawing flexibly from a pension can permanently reduce how much you may contribute afterwards.
Questions
How much tax relief do pension contributions get?
Generally your marginal rate. In the UK that is 20%, 40% or 45%, rising to 60% between £100,000 and £125,140 where the contribution also restores withdrawn personal allowance.
Is any of the relief automatic?
In the UK only the basic 20% is added by the provider. Relief above that requires a self assessment return, and it expires if not claimed within four tax years.
How much can I put into a pension each year?
Usually. The UK allows £60,000 a year including employer contributions, tapering to £10,000 for very high earners, with three years of unused allowance available to carry forward.
Related tools
Sources
General estimate based on published HMRC rates for the current period. Not tax advice. Confirm your position with HMRC or a qualified adviser.
T1