How much tax relief do I get on pension contributions?

Everyone gets 20% basic rate relief automatically. Higher rate (40%) and Additional rate (45%) taxpayers can claim an extra 20% or 25% back via their Self Assessment tax return.

What is the Pension Tapered Annual Allowance?

For high earners with an 'Adjusted Income' over £260,000, the standard £60,000 Annual Allowance is reduced by £1 for every £2 of income, down to a minimum of £10,000.

Can I use unused pension allowance from previous years?

Yes. The 'Carry Forward' rule allows you to use unused allowances from the previous three tax years, potentially allowing for a massive tax-efficient contribution in the current year.

UK Pension Tax Relief Calculator: Calculate Your 40% Refund

Pensions are arguably the last great tax shelter in the UK. For every £80 you put into a SIPP (Self-Invested Personal Pension), the government automatically adds £20. If you are a Higher Rate taxpayer, you can claim another £20 back, meaning a £100 investment effectively costs you just £60.

For high earners, maximizing pension contributions is the most efficient way to reduce your Income Tax bill legally.

How High Earners Get 60% Tax Relief

While the standard top rate of relief is 45%, there is a "sweet spot" where you can achieve an effective 60% tax relief.

When your income exceeds £100,000, your Personal Allowance is withdrawn by £1 for every £2 earned. This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140. By paying into a pension, you lower your "Adjusted Net Income," restoring your Personal Allowance and reclaiming that 60% tax.

The Tapered Annual Allowance (2025/26)

For very high earners, the generous £60,000 Annual Allowance is restricted. This is known as the Tapered Annual Allowance.

Threshold Income: £200,000 (Net income + salary sacrifice).
Adjusted Income: £260,000 (Income + employer pension contributions).

If you breach both thresholds, your Annual Allowance is reduced by £1 for every £2 of Adjusted Income over £260,000. The minimum "floor" is £10,000 (reached at an income of £360,000).

What is "Carry Forward"?

Did you maximize your pension contributions in the last 3 years? If not, you may have "unused allowance." The Carry Forward rule allows you to use these unused caps from the previous three tax years (providing you were a member of a registered pension scheme during those years).

This is particularly powerful for business owners or those who have just received a large bonus and want to shelter it from tax.

SIPP vs Workplace Pension

Relief at Source (SIPPs): You pay net of basic tax. The provider claims the 20% basic relief. You must claim higher rate relief yourself.
Net Pay (Workplace): Contributions are taken from gross salary. You get full relief immediately, so there is nothing to claim back.

This calculator is designed primarily for "Relief at Source" (SIPP) calculations, as this is where the "Claim Back" mechanism applies.