UK Pension Tax Relief Calculator
Calculate the tax relief on your pension contributions for 2026/27 or 2025/26. See your basic rate relief, any additional higher-rate claim, your Annual Allowance position, and the true effective cost of your contribution.
Enter the total unused Annual Allowance you can carry forward from the past 3 tax years.
Total Tax Relief
£2,000 basic + £1,946 additional
Effective Cost of Contribution
After relief
Annual Allowance Status
£10,000 of £60,000 used (17%)
The Annual Allowance limits total pension input — your contributions plus any employer contributions — and has no earnings cap of its own. Your earnings limit tax relief instead, shown separately below.
How pension tax relief works
Pension contributions are topped up with tax relief at your marginal rate, so a pension is one of the most tax-efficient places to save. How you get the relief depends on your scheme. With relief at source (personal pensions and SIPPs) the provider adds 20% automatically and higher- or additional-rate taxpayers reclaim the rest. With a net pay arrangement (many workplace schemes) the contribution comes out of gross pay, so full relief is given immediately. With salary sacrifice you give up salary for an employer contribution and save National Insurance on top of income tax — the most efficient route of all.
The catch for personal-pension savers: only the basic 20% is automatic. Higher-rate (40%) and additional-rate (45%) taxpayers must claim the extra 20% or 25% through Self Assessment or a tax-code change — relief that is often left unclaimed. Scottish taxpayers have their own bands (20/21/42/45/48%).
Worked examples (2026/27)
Higher-rate taxpayer pays £8,000 into a SIPP
- Provider adds 20% basic relief: £2,000, so £10,000 is invested.
- You reclaim a further 20% (£2,000) via Self Assessment.
- Net cost of £10,000 in your pension: £6,000 — 40% effective relief.
Income in the £100k–£125,140 band
- In this band the Personal Allowance is withdrawn, creating a ~60% effective tax rate.
- A £1,000 gross pension contribution here can cost as little as £400 net once the reclaimed allowance is counted.
- It also pulls you back below £100,000, restoring tax-free Personal Allowance.
Annual Allowance, carry forward, and the taper
Relief is generous but capped, and by two separate rules. The Annual Allowance is £60,000 a year across all your pensions including employer contributions, with no earnings cap of its own; exceed it and an Annual Allowance Charge applies to the excess at your marginal rate. Separately, tax relief on your own contributions is limited to the greater of your relevant UK earnings and £3,600 — go over that and the relief is simply not due, which is not the same thing as an Annual Allowance Charge. You can carry forward unused Annual Allowance from the previous three years once the current year is used — handy after a bonus or a strong year of business profit.
Two limits hit specific groups. High earners face the tapered Annual Allowance: when threshold income tops £200,000 and adjusted income tops £260,000, the allowance falls by £1 for every £2 of adjusted income above £260,000, to a £10,000 floor at £360,000. Anyone who has flexibly accessed a defined-contribution pension is limited by the Money Purchase Annual Allowance of £10,000 for future DC contributions. Check your headroom with the pension annual allowance calculator.
Scroll the table sideways to see all four columns.
| Rule | What it limits, and whose contributions count | Carry forward | If you go over it |
|---|---|---|---|
| Your tax relief limit Greater of your earnings and £3,600 | Only the contributions you pay. Capped at the greater of your relevant UK earnings chargeable to tax for that year and the £3,600 basic amount. What your employer pays in never qualifies for your relief. HMRC PTM044100 | No. The limit is measured against that tax year's own earnings, so earnings you did not use in an earlier year cannot be brought forward. | No tax charge. Relief is simply not due on the excess — HMRC "can ask you to pay back anything over this limit". The money can stay in the pension. GOV.UK — Tax relief |
| Annual Allowance £60,000 for 2026/27 | Total pension input across all your pensions — your own contributions, anything your employer pays in, and any defined-benefit growth. It has no earnings cap of its own. Lower in two cases: a tapered allowance down to £10,000 once threshold income tops £200,000 and adjusted income tops £260,000, and the £10,000 money purchase allowance after you flexibly access a pot. Check either with the pension annual allowance calculator. GOV.UK — Annual allowance | Yes — unused allowance from the previous 3 tax years is added to this year's. | An Annual Allowance Charge on the excess at your marginal rate, declared in the pension savings section of your Self Assessment return. Relief already given on the contribution is not withdrawn. |
| Carry forward Previous 3 tax years | Not a limit of its own. Unused Annual Allowance from the previous 3 tax years is added to the current year's allowance, giving a higher allowance to set against this year's total pension input. HMRC PTM055100 | Only from a year in which you were a member of a registered pension scheme at some point. The current year's allowance is used first, then the earliest year available. | Nothing to exceed — but note what it does not do: it does not lift your tax relief limit above this year's earnings, and where the money purchase annual allowance applies it is added to the alternative annual allowance, not to the £10,000 MPAA. HMRC PTM056510 |
The last column is the distinction worth keeping straight. Going over the Annual Allowance creates a tax charge: the excess is added to your taxable income as a top slice and taxed, on top of the tax you already paid. Going over your tax relief limit creates no charge at all — the relief was never due, so it is withheld or recovered, and you are left where you would have been had you not claimed it. You can breach either one on its own: paying more than you earn into a pension well inside the Annual Allowance breaches only the relief limit, while a large employer contribution can breach only the Annual Allowance.
Figures are for the 2026/27 tax year and do not follow the year selector in the calculator above. The £60,000 Annual Allowance is unchanged for 2026/27, 2025/26 and 2024/25.
Frequently asked questions
How does pension tax relief work in the UK?
The government tops up pension contributions at your marginal rate. Basic-rate taxpayers get 20% automatically — pay in £80 and £100 lands in your pension. Higher-rate (40%) and additional-rate (45%) taxpayers claim the extra 20% or 25% through Self Assessment or by asking HMRC to adjust their tax code. Scotland has its own bands (20/21/42/45/48%).
What are the three ways relief is given?
Relief at source (personal/SIPP pensions): the provider adds 20% and you reclaim the rest via Self Assessment. Net pay (many workplace schemes): contributions come out before tax, so you get full relief immediately through payroll. Salary sacrifice: you swap salary for an employer contribution and save National Insurance as well as income tax — the most tax-efficient route.
What is the Annual Allowance for pensions?
The Annual Allowance (AA) is the most that can go into all your pensions in a tax year before a tax charge — £60,000 for 2024/25, 2025/26 and 2026/27 — and it counts employer contributions as well as your own. It has no earnings cap of its own. Exceed it and an Annual Allowance Charge applies to the excess at your marginal rate.
Is the Annual Allowance the same as my tax relief limit?
No — they are two different limits and you can breach one without breaching the other. Tax relief on your own contributions is capped by section 190 Finance Act 2004 at the greater of your relevant UK earnings and £3,600; the Annual Allowance of £60,000 caps total pension input including anything your employer pays in. Going over the Annual Allowance triggers an Annual Allowance Charge on the excess. Going over your relief limit does not: relief is simply not due on the excess, and HMRC can ask for any relief already given back.
Can I carry forward unused Annual Allowance?
Yes. You can carry forward unused AA from the previous three tax years, provided you were a pension scheme member in those years and have used the current year's allowance first. This can allow a contribution well above £60,000 in a single year — useful after a bonus or business profit spike.
What is the tapered Annual Allowance?
High earners get a reduced AA. The taper bites when threshold income exceeds £200,000 and adjusted income exceeds £260,000. For every £2 of adjusted income above £260,000 the AA falls by £1, down to a minimum of £10,000 once adjusted income reaches £360,000.
What is the Money Purchase Annual Allowance (MPAA)?
Once you flexibly access a defined-contribution pension (for example, taking taxable income via drawdown), your allowance for future DC contributions drops to the MPAA of £10,000 a year, and you lose the ability to carry forward for those contributions. Taking only your 25% tax-free lump sum does not trigger it.
Why is pension relief worth ~60% around £100,000 of income?
Between £100,000 and £125,140 your Personal Allowance is withdrawn at £1 for every £2, creating a ~60% effective tax rate. A pension contribution reduces your adjusted net income, reclaiming the lost Personal Allowance — so the effective relief on contributions in that band is around 60%.
How do higher-rate taxpayers claim the extra relief?
If your pension uses relief at source, only 20% is added automatically. Claim the remaining 20% (higher rate) or 25% (additional rate) through your Self Assessment return, or by contacting HMRC to adjust your tax code. Many people never claim this and miss out — it is not automatic for personal pensions.
How much tax-free cash can I take from my pension?
Normally up to 25% of the pension value as a tax-free lump sum, subject to the lump sum allowance. The rest is taxed as income when drawn. This calculator focuses on relief going in; the tax-free cash applies when you take benefits.
Sources
Related Calculators
- Pension Annual Allowance Calculator — Check your contribution headroom with carry forward
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- Take-Home Pay Calculator
- Tax Year Comparison
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