Higher-rate taxpayer? Don't miss out on £1,000s pension tax relief

You might not automatically get the full tax relief you're entitled to

If you're earning, you'll get tax relief on pension contributions – meaning you get extra money for free on top of the amount you're contributing. But if you're a higher or additional rate taxpayer, you might need to CLAIM the tax relief you're due – sometimes worth £1,000s. Around £1.3 billion of pension tax relief was unclaimed in the five years to 2022.

How your tax relief works depends on the type of pension scheme

If you're a higher or additional rate taxpayer, tax relief on your pension contributions is only automatic if you're paying into a net pay pension.

If you're paying into a relief at source pension, you may have to take action to get the tax relief you're due. 

If you contribute to a workplace pension, your employer will choose the scheme – so it could be either arrangement. If you're contributing to a personal pension, it'll be relief at source. We explain more on both types below...

Net pay pensions

With net pay pensions, your employer will take the full amount of your pension contribution from your pay BEFORE any tax is deducted.

You'll then pay tax on your leftover earnings (your salary minus your pension contribution). Although you've paid the full amount of your pension contributions yourself, you'll get the tax relief straightaway because you'll end up paying less tax. 

This means that even if you're a higher or additional rate taxpayer, you'll get full tax relief without having to claim it – so you won't need to claim any extra tax relief.

The exception is if you don't pay tax – then you won't benefit from tax relief when you contribute to a net pay scheme. However, the Government has said that from the 2024/25 tax year it'll pay top-ups to low-income earners making contributions into a net pay pension.

Relief at source pensions

If you contribute to a relief at source pension, you make your pension contributions from your after-tax pay. Your pension provider will then claim 20% tax relief direct from the government, which they add to your pension pot. If you're a basic-rate taxpayer that means you'll get the right amount of tax relief on your pension contributions automatically. 

If you pay more than 20% in tax, you won't get the maximum you're entitled to automatically – you'll have to claim the extra tax relief yourself. 

Contributing to a relief at source pension can be the best option for people who don't pay any tax as you'll still get 20% tax relief automatically. Similarly, if you live in Scotland and pay at the Scottish starter rate of 19%, you still get tax relief on your pension contributions at 20%.

How do I know what type of pension scheme I have?

If you contribute to a workplace pension, the easiest way to check what type of pension scheme you have is to talk to your HR or payroll department. 
 
If you're contributing to a personal pension, you can check what type of scheme it is by contacting your provider directly. 

 

Claiming tax relief on your pension could see you gain £1,000s

If you're a higher or additional rate taxpayer paying into a  relief at source pension, claiming the extra tax relief you're due can be a big boost to your retirement savings... 
 
  • Higher-rate taxpayers can claim an extra 20% tax relief on earnings they pay 40% tax on (totalling up to 40% in pension tax relief). This means £10,000 of pension contributions could cost as little as £6,000.
  • Additional-rate taxpayers can claim an 25% extra tax relief on earnings they pay 45% tax on (totalling up to 45% in pension tax relief). This means £10,000 of pension contributions could cost as little as £5,500.
  • There are limits on how much you add to your pension savings each year while still getting tax relief. It's worth knowing what these limits are, especially if you're a higher earner and/or thinking of contributing large amounts to your pension savings.

You can claim up to four years of backdated tax relief. If you're a higher or additional rate tax-payer and have been contributing to a relief at source pension, you could be entitled to £1000s back. 

How it works in Scotland

Scotland has different tax bands, but the same principle applies: if you earn enough to pay intermediate, higher or top income tax rates, you might be eligible to claim back additional tax relief on your pension contributions (depending on the type of pension you have). 

In 2024/25 this means you may be able to claim extra tax relief if you are a Scottish taxpayer with taxable income of more than £26,561 a year. 

  • 1% up to the amount of any income you have paid 21% tax on
  • 22% up to the amount of any income you have paid 42% tax on
  • 25% up to the amount of any income you have paid 45% tax on
  • 28% up to the amount of any income you have paid 48% tax on

Note: If you normally pay the starter tax rate of 19%, your pension provider will claim 20% tax relief automatically, but you don't need to pay back the 1% difference. 

Step-by-step reclaim

There are two ways to reclaim your additional pension tax relief: through your self-assessed tax return, or by contacting HMRC directly. 

Claiming through self-assessment

Submitting a self-assessment tax return is the easiest way to claim tax relief on your pension contributions.

  • First, register online for self-assessment
  • When you fill out the form, look for the 'tax reliefs' section. 
  • Declare your pension contributions. You should include the gross amount (the amount you've contributed including the 20% tax relief you've already received). 
  • If your contributions are going to remain the same next year your tax code will be changed so that you don't have to reapply for tax relief again next year. If you're unsure how much you'll earn or what your contributions are going to be next year, select 'one-off contribution' to avoid your tax code being changed. If you select this option you'll get your tax relief as a rebate at the end of the year – this can either be paid directly into a bank account or sent to you as a cheque.

You'll be able to claim tax relief on any pension contributions for the past four years. 

Reclaim by contacting HMRC

You can also claim additional tax relief on your pension contributions by getting in touch with HMRC directly. 

You can call HMRC on 0300 200 3300

Or, you can write to HMRC: 

Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom

You'll need your National Insurance number and proof from your pension provider of payments made for each tax year you're claiming for, and whether these payment amounts are before or after tax. 

If your pension contributions are going to be the same each year going forward, you can ask HMRC to change your tax code so that you don't have to reapply for tax relief again next year. If you're unsure, tell HMRC that this is a one-off contribution and you don't want your tax code changed. If you choose this option you'll get your tax relief as a rebate at the end of the year – this can either be paid directly into a bank account or sent to you as a cheque.

There are limits on how much you can contribute and still get tax relief

There's an annual limit on the amount you can save across all your pensions while still getting tax relief. It's usually either 100% of your earnings or £60,000 – whichever is lower. This limit includes your contributions and employer contributions. 

That means the total you can put into pension savings each year will depend on your income – and if you earn more than £260,000, your annual limit starts to decrease:

  • Earnings of £3,600 or less – you can put £2,880 in to a pension each year and it'll be made up to £3,600 with tax relief. This is even true for contributions that are made into a child's pension.

  • Non-taxpaying earners (those earning between £3,601 and £12,570) – you can put 100% of your earnings into a pension each year, and it'll be eligible for a 20% tax relief.

  • Taxpaying earners (earning £260,000 or less) – you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot.

  • Earnings of over £260,000 – your annual limit lowers by £1 for every £2 of income that goes over £260,000. So, if you're earning £280,000, for example, you'll only only get tax relief on the first £50,000 you put in your pension each year.

  • If you're over 55 and have taken income from your pension – you can only contribute up to a maximum of £10,000 a year, or 100% of what you earn, whichever if lower. This is to stop you taking large amounts from your pension and then putting it back in to get tax relief. This is called the Money Purchase Annual Allowance.

You can often carry over any unused allowance from the previous three tax years

This is mostly useful for larger earners who want to put in a big lump sum (maybe due to an inheritance or a big bonus) above the usual £60,000 annual cap

If you had a private or workplace pension open, yet hadn’t used your maximum allowance in any of the three previous tax years, you can bring it forward and use it this year – putting in a maximum of this year's earnings. You can’t do this if you have only opened your first pension this year. For  example:

Penny Saver earns £90,000 a year, so the maximum she can put in your pension is £60,000 (as that’s the annual allowance cap). Last year Penny put £10,000 into her pension so she has £50,000 unused allowance.


This year Penny received a £100,000 inheritance, and wants to put it into her pension. The most she could put in on normal rules this year would be £60,000. But she can carry forward last year's unused allowance and use that too – up to her earnings this year of £90,000.

If you're a higher earner and not sure what this means for the tax relief you're entitled to, you'll likely benefit from seeing an independent financial adviser.

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