Breakdown
How it works
With relief at source (SIPPs, personal pensions) you pay 80% and the provider claims 20% from HMRC; higher and additional-rate taxpayers claim the extra 20% or 25% through Self Assessment. Under net pay or salary sacrifice the contribution leaves your pay before tax, so full relief is automatic — and salary sacrifice also saves National Insurance.
Formula
Worked example
Salary £60,000, you pay £6,000 into a SIPP: provider adds £1,500 (gross £7,500). £7,500 falls in the 40% band → £1,500 extra relief via tax return. Real cost £4,500 for £7,500 invested (40% relief).
Frequently asked questions
How do I claim higher-rate relief?
Through Self Assessment (box for gross contributions to relief-at-source schemes) or by asking HMRC to adjust your tax code. Many higher-rate taxpayers never claim it — check previous years (up to 4) too.
What is the annual allowance?
£60,000 of total contributions (yours + employer + relief) per tax year, or 100% of earnings if lower. Unused allowance from the previous 3 years can be carried forward. Tapers to £10,000 for adjusted income above £360,000.
Can pension contributions get my personal allowance back?
Yes. Between £100,000 and £125,140 the effective relief is 60% because contributions restore the tapered personal allowance. Contributing enough to bring adjusted net income to £100,000 is one of the best-value moves in the UK tax system.
Can UK expats contribute?
Only £3,600 gross a year (£2,880 net) with relief if you have no UK earnings, and only for 5 tax years after leaving. Employer contributions to a UK scheme are not possible without UK employment.