Pension tax relief and benefits

For every payment you make into your pension, we add a 25% government top-up. Tax rules may change in the future and are subject to your individual circumstances.

Remember that:

• If you pay in more than your annual allowance, you may have to give some of this tax relief back to HMRC.
• If you pay income tax above the basic rate, you may be able to claim additional tax relief from HMRC directly via your Self-Assessment tax return. This will be offset against your total tax liability for the tax year rather than paid into your pension.

The exact amount you can claim depends on your income tax bracket, where you live in the UK and the annual allowance limit for that tax year. You can find out more on gov.uk

This table shows the different levels of tax relief you can get on a £10,000 investment, based on the three income tax brackets in England, Northern Ireland and Wales.

UK (exc. Scotland)	20% basic rate	40% higher rate	45% additional rate
You pay in	£10,000	£10,000	£10,000
Extra 25% (equivalent to 20% at source)	£2,500	£2,500	£2,500
Total investment value	£12,500	£12,500	£12,500
Extra you can claim via Self Assessment	£0.00	£2,500	£3,125
Total investment cost	£10,000	£7,500	£6,875

If you pay income tax in Scotland, you’ll still get the 25% top up, which is equivalent to 20% at source. Any additional tax relief you can claim from HMRC will differ. This table shows the different levels of tax relief you can get on a £10,000 investment, based on Scotland's five income tax brackets.

Scotland	19% starter rate	20% basic rate	21% intermediate rate	42% higher rate	45% additional rate	48% top rate
You pay in	£10,000	£10,000	£10,000	£10,000	£10,000	£10,000
Extra 25% (equivalent to 20% at source)	£2,500	£2,500	£2,500	£2,500	£2,500	£2,500
Total investment value	£12,500	£12,500	£12,500	£12,500	£12,500	£12,500
Extra you can claim via Self Assessment	£0.00	£0.00	£125	£2,750	£3,125	£3,500
Total investment cost	£10,000	£10,000	£9,875	£7,250	£6,875	£6,500

 

Note that these are the figures for the 2024/25 tax year only. They could change in the future. And if you pay in more than your Annual Allowance, you might have to repay some of the tax relief you received.

Investments in pensions grow free from income tax and capital gains tax.

You can withdraw money from your pension when you turn 55 (rising to 57 from 2028 onwards), but you can continue paying into a pension until you’re 75 and still receive tax relief.

If you pay money in after you’ve started withdrawing, you may be affected by the money purchase annual allowance (MPAA). This stops people from getting a second round of tax relief by withdrawing from a pension then paying straight back into the same pension or another pension they hold. The MPAA is currently £10,000, meaning you may be taxed extra if you pay in more than this allowance after withdrawing money from your pension. You can’t roll any unused MPAA over into a new tax year.   

The exact amount of tax relief you may receive depends on your total annual income and your tax rate. If you’re not sure about the tax relief you’re eligible to receive, speak to a tax adviser, accountant or take a look at gov.uk.