Question 1

How much tax relief do I get on pension contributions?

Accepted Answer

All UK taxpayers get basic rate (20%) tax relief on pension contributions automatically — your provider claims it back from HMRC. Higher rate taxpayers can claim an extra 20% (a total of 40%) and additional rate taxpayers can claim an extra 25% (a total of 45%). The extra relief is not added automatically — you must claim it via self-assessment.

Question 2

Why didn't I get higher rate tax relief on my pension?

Accepted Answer

If you pay into a Relief at Source pension scheme (most personal pensions), only the basic 20% is added automatically. To get the extra higher or additional rate relief, you need to claim it through self-assessment. Many higher-rate taxpayers don't realise this and lose out on hundreds or thousands of pounds a year. Salary sacrifice schemes are different — the relief is given automatically because the contribution is taken before tax.

Question 3

What is the pension annual allowance for 2025/26?

Accepted Answer

The annual allowance is £60,000 for the 2025/26 tax year. This is the total amount you (and your employer) can contribute to your pensions in a tax year while still receiving tax relief. You can also carry forward unused allowance from the previous three tax years if you've maxed out the current year. High earners (with adjusted income above £260,000) may have a tapered annual allowance as low as £10,000.

Question 4

Is salary sacrifice better than relief at source for tax relief?

Accepted Answer

Salary sacrifice is usually better for total relief because you save both income tax AND National Insurance, whereas relief at source only saves income tax. The exact saving depends on your salary band — at £45,000 in 2025/26, salary sacrifice typically saves around 8% in NI on top of the income tax relief.

What does your pension actually cost you?