How do I claim higher-rate tax relief on my pension contributions?

Full answer

Pension contributions to a personal pension or SIPP receive 20% basic-rate tax relief automatically: HMRC tops up your payment at source. If you pay tax above the basic rate, you must claim the extra relief yourself, because it is not added automatically. Worked example: you are a higher-rate taxpayer with income of GBP 70,000 and you pay GBP 8,000 into a SIPP. The scheme reclaims 20%, so GBP 2,000 is added, making a gross contribution of GBP 10,000. Because you pay 40% tax, you are entitled to 40% relief on the GBP 10,000. You have already received 20% at source, so you claim the remaining 20% (GBP 2,000) through self assessment. Your GBP 10,000 pension pot has effectively cost you GBP 6,000. The relief works by extending your basic-rate band by the gross contribution, which can also reduce other charges such as the High Income Child Benefit Charge or restore part of a tapered Personal Allowance between GBP 100,000 and GBP 125,140, where the effective relief can be even higher. Additional-rate taxpayers (45%) claim a further 25% on top of the 20% given at source. Scottish taxpayers claim relief at their own rates. If your contributions are made through a workplace net pay or salary sacrifice arrangement, full relief is usually already given and there is nothing further to claim. Use the pension calculator to see the gross contribution and the relief due, and the income-tax calculator to check your marginal rate. For how to report contributions on a tax return, see gov.uk.

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