How to calculate tax relief on your pension contributions

Beyond simply acting as a place to invest your money, there are tax advantages to paying into a pension scheme. In return for longer-term savings, the government supports eligible savers by giving tax relief on contributions. This means that money that would have ordinarily gone to the government is instead contributed to your retirement income, subject to HMRC limits and your individual tax position.

• Tax relief is calculated on your taxable income and the rate of Income Tax you pay. 
  Basic-rate taxpayers – Those who earn between £12,571 to £50,270 may receive Income Tax relief at 20%, if eligible.
• Higher-rate taxpayers - Those who earn between £50,271 to £125,140 may receive Income Tax relief at 40% on income, within the higher-rate band, if eligible.
• Additional-rate taxpayers - Those who earn over £125,140 may receive Income Tax relief at 45% on income within the additional-rate band, if eligible.

The figures above are based on HMRC Income Tax bands for the 2026/27 tax year in England, Wales and Northern Ireland. Different rates and bands apply in Scotland. The amount of tax relief you receive will depend on your personal circumstances and current tax rules.

TPT operates a ‘net pay’ arrangement where your own pension contributions are deducted from your taxable pay before your tax rate is worked out. Your contributions are taken from your pay before Income Tax is calculated.

If you want to see how much tax relief may apply to your pension contributions, MoneyHelper has an easy-to-use contribution calculator to help with this. The calculator is designed as a guide only and can help you understand how tax relief may apply to your pension contributions.

Source: Income Tax rates and Personal Allowances : Current rates and allowances - GOV.UK