Pension tax relief – are you making the most of it?

Pensions are one of the most tax-efficient ways to save for your future. To encourage you to save, you get valuable tax breaks on the contributions you make to your pension – normally at the highest rate of Income Tax you pay. This means 20% relief for basic rate tax payers, 40% for higher rate tax payers and 45% for additional rate payers. (Tax rates and bands differ in Scotland.)

Currently, most savers can pay up to £40,000 a year into their pension with the benefit of tax relief, so for many people that means they have scope to make additional contributions to boost their savings for retirement. As well as the Annual Allowance, there’s a limit to how big your pension can get over your lifetime. Currently, that means that if your pensions exceed £1,055,000, you’ll face an extra tax charge.


Pension rules can seem complicated and confusing, but we are here to help you make the best possible use of the tax allowances available to you.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.