You can get tax relief on private pension contributions worth up to 100% of your annual earnings. You’ll either get the tax relief automatically, or you’ll have to claim it yourself. It depends on the type of pension scheme you’re in, and the rate of Income Tax you pay. There are two kinds of pension schemes where you get relief automatically. Either: your employer takes workplace pension contributions out of your pay before deducting Income Tax your pension provider claims tax relief from the government at the basic 20% rate and adds it to your pension pot (‘relief at source’) If your rate of Income Tax in Scotland is 19% your pension provider will claim tax relief for you at a rate of 20%. You do not need to pay the difference. UK tax relief is also available on contributions made to certain types of overseas pension schemes . It’s up to you to make sure you’re not getting tax relief on pension contributions worth more than 100% of your annual earnings. HM Revenue and Customs (HMRC) can ask you to pay back anything over this limit. Relief at source You get relief at source in all personal and stakeholder pensions, and some workplace pensions. To get relief at source Before paying into a scheme, you need to agree to certain conditions about your contributions (‘make declarations’). Your pension provider will tell you what these are. You also need to give your pension provider your: full name and address date of birth National Insurance number employment status - or tell them if you’re retired, a full time student, a carer or aged under 16 Your employer may do this for you if you’re automatically enrolled in their pension scheme. Your pension provider will let you know if this is the case and ask you to confirm your details are correct. You must do this within 30 days. Claiming tax relief yourself In some cases, you need to claim tax relief on pension contributions yourself. You’ll need to make a claim if: you pay Income Tax at a rate above 20% and your pension provider claims the first 20% for you (relief at source) your pension scheme is not set up for automatic tax relief someone else pays into your pension If you’re paying in an amount greater than £10,000, you’ll need to contact HMRC to claim the tax relief. If you pay Income Tax above 20% (England, Wales or Northern Ireland) You can claim additional tax relief on your Self Assessment tax return for money you put into a private pension of: 20% up to the amount of any income you have paid 40% tax on 25% up to the amount of any income you have paid 45% tax on You can also call or write to HMRC to claim if you pay Income Tax at 40%. Example You earn £60,000 in the 2024 to 2025 tax year and pay 40% tax on £10,000. You put £15,000 into a private pension. You automatically get tax relief at source on the full £15,000. You can claim an extra 20% tax relief on £10,000 (the same amount you paid higher rate tax on) through your Self Assessment tax return. You do not get additional relief on the remaining £5,000 you put in your pension. If you pay Income Tax above 20% (Scotland) You can claim additional tax relief on your Self Assessment tax return for money you put into a private pension of: 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 You can call or write to HMRC to claim if you do not fill in a Self Assessment tax return. If your pension scheme is not set up for automatic tax relief Claim tax relief in your Self Assessment tax return if your pension scheme is not set up for automatic tax relief. Call or write to HMRC if you do not fill in a tax return. You cannot claim tax relief if your pension scheme is not registered with HMRC. If someone else pays into your pension When someone else (for example your partner) pays into your pension, you automatically get tax relief at 20% if your pension provider claims it for you (relief at source). If you’re in a workplace pension that allows other people to contribute you may need to claim the tax relief on those contributions - call or write to HMRC . Submit or increase a claim over £10,000 You must write to HMRC to: make a new claim for a pension contribution over £10,000 increase your current claim by more than 10% (if the current claim is already over £10,000) If you’re increasing your current claim by less than 10%, you can tell HMRC over the phone. In your letter, include: proof from your pension provider of payments made for each tax year you’re claiming for whether the payment amounts are before or after tax Send the letter to the Pay As You Earn and Self Assessment team at HMRC . Pay As You Earn and Self Assessment HM Revenue and Customs BX9 1AS United Kingdom If you do not pay Income Tax You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you: you do not pay Income Tax, for example because you’re on a low income your pension provider claims tax relief for you at a rate of 20% (relief at source) Life insurance policies You cannot get tax relief if you use your pension contributions to pay a personal term assurance policy, unless it’s a protected policy. Personal term assurance is a life insurance policy that either: ends when the first insured person dies insures people who are all from the same family

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax. You’ll only pay tax if you go above the annual allowance. This is £60,000 this tax year. What counts towards the annual allowance Your annual allowance applies to all of your private pensions , if you have more than one. This includes: the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (for example, your employer) any increase in a defined benefit scheme in a tax year If you use all of your annual allowance for the current tax year You might be able to carry over any annual allowance you did not use from the previous 3 tax years. When your annual allowance is lower than £60,000 Your annual allowance might be lower if you have: flexibly accessed your pension pot a high income If you flexibly access your pension Your annual allowance might be lower if you flexibly access your pension . For example, this could include taking: cash or a short-term annuity from a flexi-access drawdown fund cash from a pension pot (‘uncrystallised funds pension lump sums’) The lower allowance is called the ‘money purchase annual allowance’ . If you have a high income You’ll have a reduced (‘tapered’) annual allowance in the current tax year if both: your ‘threshold income’ is over £200,000 your ‘adjusted income’ is over £260,000 The threshold income and adjusted income limits are different for earlier tax years . Work out your reduced annual allowance . If you go above the annual allowance You’ll get a statement from your pension provider telling you if you go above the annual allowance in their scheme. If you’re in more than one pension scheme, ask each pension provider for statements. You can also use a calculator to work out how much you’ve gone above the allowance . If you go over your annual allowance, either you or your pension provider must pay the tax . Fill in the ‘Pension savings tax charges’ section of a Self Assessment tax return to tell HMRC about the tax, even if your pension provider pays all or part of it. You’ll need form SA101 if you’re using a paper form. You can still claim tax relief for pension contributions on your Self Assessment tax return if you’re above the annual allowance. HMRC does not tax anyone for going over their annual allowance in a tax year if they: retired and took all their pension pots because of serious ill health died

You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The most you can take is £268,275. This is known as the lump sum allowance . You or your beneficiaries may be able to take a tax-free lump sum of up to £1,073,100 in certain circumstances. For example, if you take a lump sum due to serious illness or your beneficiaries are paid certain lump sum death benefits. This is known as the lump sum and death benefit allowance . If you take a lump sum that goes above your allowances, you’ll need to pay Income Tax on the extra amount. Your pension provider will take off the charge before you get your payment. If you hold a protected allowance , this may increase the amount of tax-free lump sums you can take from your pensions. Check how much lump sum allowance you’ve used Ask your pension provider how much you’ve used of: your lump sum allowance your lump sum and death benefit allowance You must add up how much of your allowances you’ve used in all the pension schemes you’re in. What counts towards your lump sum allowance It depends on the type of lump sum taken. It counts towards your lump sum allowance if you take any of the following: a pension commencement lump sum an uncrystallised funds pension lump sum (the 25% tax-free part) a standalone lump sum It counts towards your lump sum and death benefit allowance if you take either of the following: a serious ill-health lump sum certain lump sum death benefits paid to your beneficiaries Any lump sum that counts towards your lump sum allowance will also count towards your lump sum and death benefit allowance. Protect your lifetime allowance The lifetime allowance was abolished on 6 April 2024. If you had pension savings before April 2016, you may be able to apply to protect your lifetime allowance from when it was reduced in April 2016. This protection also applies to your lump sum allowance and lump sum and death benefit allowance. If you have the right to take your pension benefits before you’re 50 You may have a reduced lump sum allowance or lump sum and death benefit allowance if all the following apply: you had an eligible job (for example professional sports, dance and modelling) you joined your pension scheme before 2006 you take a lump sum before you’re 55 Your lump sum allowance or lump sum and death benefit allowance is not reduced if you’re in a pension scheme for uniformed services - for example the armed forces, police and fire services.

Tax on your private pension contributions

Overview

Your private pension contributions are tax-free up to certain limits.

This applies to most private pension schemes, for example:

workplace pensions
personal and stakeholder pensions
overseas pension schemes that qualify for UK tax relief - ask your provider if it’s a ‘qualifying overseas pension scheme’

Pension schemes must be registered with HM Revenue and Customs (HMRC) to qualify for tax relief. Check with your pension provider if you’re unsure if your scheme is registered or not.

You pay tax when you take money out of a pension.

Limits to your tax-free contributions

You usually pay tax if savings in your pension pots go above:

100% of your earnings in a year - this is the limit on tax relief you get
£60,000 a year - check your ‘annual allowance’

You also pay tax on contributions if your pension provider:

is not registered for tax relief with HMRC
does not invest your pension pot according to HMRC’s rules

View a printable version of the whole guide

Tax on your private pension contributions

Overview

Limits to your tax-free contributions

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Tax on your private pension contributions

Overview

Limits to your tax-free contributions

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