Pension tax relief
How to get up to a 45% boost from the government
Pension tax relief explained
To help you to save toward your retirement, the government gives you money each time you make a payment to your pension. This is known as pension tax relief.
The amount of tax relief you get usually depends on the rate of income tax you pay. If you’re a Scottish taxpayer, tax rates and bands differ, and so different rates of tax relief apply.
Basic-rate taxpayers and non-earners
The government will always give you 20% in basic-rate tax relief when you add money to your pension. Even if you don’t pay tax or are a non-earner.
For example, if you added £800 to your pension, the government will add an extra £200 in tax relief.
Higher and additional-rate taxpayers
If you’re a higher-rate taxpayer, you can get up to 40% tax relief. Meaning a £10,000 pension payment, could cost you as little as £6,000.
If you’re an additional-rate taxpayer, you can get up to 45%.
Just be aware, you must pay sufficient tax at the higher or additional rate to claim the full 40% or 45% tax relief.
Pension tax relief calculator
Calculate how much tax relief you could get from your pension contributions.
*For more details of the Scottish rate of income tax please see our Scottish income tax page.
Are there any rules or limits on pension tax relief?
You must be under age 75 to get tax relief. There are also limits on how much tax relief you can receive and how much you can pay into a pension.
You’ll only get tax relief on personal pension contributions up to 100% of your UK earnings, or £3,600 if this is greater (if you’re a low or non-earner).
Let’s say you earned £35,000 a year. The maximum you could pay in across all your pensions and benefit from tax relief would be £35,000. You would pay in £28,000 and the government would add £7,000 in basic-rate tax relief on top to bring the total contribution to £35,000.
Your pension contributions, including any made by your employer, are also limited by the annual allowance which is currently £60,000 each tax year for most people. If you’ve already taken money out of a pension, or you’re a higher earner, your annual allowance could be much lower.
How to claim pension tax relief
For personal pensions (such as the HL SIPP), and certain workplace pensions, basic-rate tax relief is usually claimed back automatically by your pension provider. If you pay higher rates of tax, you'll usually need to complete a self-assessment tax return to claim higher-rate tax relief. Then the money will be paid to you personally and not into your pension. Read our guide to claiming back higher-rate tax relief for more information.
For other pension schemes, tax relief is typically received by reducing the amount of income tax you pay.
Make the most of SIPP tax relief
If you open an award-winning HL Self-Invested Personal Pension, you can look forward to the main pension tax benefits. As well as getting tax relief, you can shelter your money from UK income and capital gains tax. Plus you’ll benefit from:
- Security - We're a FTSE-listed company, trusted by 1.8 million clients and regulated by the Financial Conduct Authority.
- Award-winning service - Best Buy Pension 2023 from the Boring Money Awards.
- Ease - Check your pension anytime online or with the HL app whenever you like.
- Ongoing support - Get help from our UK-based helpdesk and the answers to your questions no matter how big or small.
Guide to SIPPs
Download this essential guide to learn more about SIPP tax benefits and how pension tax relief works.
Two ways to add money to your SIPP
The quickest way to top up your account is online, you’ll just need your debit card or bank account details to hand.
Make a lump sum payment
You can make a one-off lump sum payment from as little as £100. You only need to pay £80, and we’ll claim 20% tax relief to take the total payment to £100.
Start or increase a regular saving
Set up monthly payments from as little as £25 (pay £20, and we’ll claim £5 in tax relief). Or increase an existing direct debit instruction.
Frequently asked questions
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