What is pension tax relief?

The government gives you tax relief on your pension. This means they give your money every time you pay into your pension. The amount of tax relief you get depends on the rate of income tax you pay. If you’re a Scottish taxpayer, tax rates and bands differ, and so the tax relief you get will be different too.

Everyone gets 20% tax relief

The government gives everyone 20% tax relief when they add money to their pension. You’ll get this even if you don’t pay tax or are a non-earner, although this will be limited to 20% tax relief on the first £3,600 paid into a pension.

This means if you add £80 to your pension, the government will add £20 in tax relief, so you’ll have £100 in your pension 🚀

Higher and additional-rate taxpayers get extra tax relief

If you’re a higher-rate taxpayer, you can get up to 40% tax relief.

For example, if you add £60 to your pension, the government will add £40 in tax relief and you’ll have a £100 in your pension 🚀 And if you’re an additional-rate taxpayer, you can get up to 45% tax relief. (You must pay enough tax at the higher or additional rate to claim the full 40% or 45% tax relief). To get this extra 20% or 25% tax relief, as a higher or additional-rate taxpayer, you’ll need to submit a self-assessment tax return each year.

Things to know about tax relief: