Pension Contributions And Tax Relief

You can get tax relief on private pension contributions worth up to 100% of your annual earnings.

Workplace pension contributions

You get the tax relief automatically if your:

1. Employer takes workplace pension contributions out of your pay before deducting Income Tax.

2. Your pension provider will claim it as tax relief and add it to your pension pot (‘relief at source’).

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).

Annual?Allowance

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. This is ￡40,000 this tax year.

You’ll have a reduced (‘tapered’) annual allowance in the current tax year if both:

1. your ‘threshold income’ is over ￡200,000

2. your ‘adjusted income’ is over ￡240,000

Important Note

It is important to note that in some cases the individual will receive tax relief on their pension contributions up to a certain amount. This is because contributions are taken from pay before tax is taken off, therefore contributions reduce the amount of pay subject to tax.