Updated on 6 April 2026

Tax relief on pension contributions

Most people get a government top-up to their pension savings in the form of tax relief on their contributions. The way it is given depends on what kind of pension scheme you are in. 

a post-it note against a dark coloured desk that reads 'PENSION TAX RELIEF' next to this is a leather folder, a pair of glasses and a black marker pen.
Vitalii Vodolazskyi / Shutterstock.com

Content on this page:

Introduction

When you save into a pension, the government usually gives you a top-up as a way of encouraging you to save for your future. This top up comes in the form of tax relief.

Conditions for relief

Tax relief is only given on pension contributions if you are under age 75 and are a relevant UK individual. Most often this means that you were resident in the UK or had taxable UK earnings in that tax year. You can read more about who is a relevant UK individual in HMRC’s technical manuals on GOV.UK.

In addition, while the amount you can put into your pension pot is not restricted, there are certain limits on the amount of contributions qualifying for tax relief in a given tax year:

  • Up to the higher of (a) your UK relevant earnings or (b) £3,600 gross pension contributions. We explain each of these in more detail below.
  • There are further limits called the annual allowance and the money purchase annual allowance, which place an overall cap on the amount you can contribute to a pension scheme each year without having tax relief clawed back. You can read more about these limits on our page Pension contributions tax relief: limits.

UK relevant earnings

As mentioned in the first bullet point above, you only get tax relief on contributions up to the maximum of your relevant UK earnings. Your relevant UK earnings include:

You can read more about the different types of income that count as relevant UK earnings on in HMRC’s Pensions Tax Manual on GOV.UK.

Property income does not normally count as relevant earnings for pension contribution purposes as it is treated as ‘unearned’ income. Up until 5 April 2025 profits from a qualifying furnished holiday let business counted as relevant UK earnings for these purposes, but this is no longer the case.

There are some property letting activities that can be treated as being a trade. If you are running a business from a property, such as a bed and breakfast, and your profits are treated as being from a trade, those would be earnings for pension purposes. Please note that identifying these activities is complicated and we recommend you seek specialist advice if you think this might apply to you.  You can find some information on this topic in HMRC’s technical manuals on GOV.UK.

Gross contributions and net contributions: explained

The contribution limits mentioned above (under the heading: Conditions for relief) apply to gross contributions. It is therefore important to understand the difference between ‘net’ and ‘gross’ contributions. Generally speaking, the gross contribution is the total increase to your pension pot as a result of the pension contribution. 

Relief at source scheme

If your pension uses the relief at source method of tax relief and you earn, say, £5,000 in the 2025/26 tax year, you can make a gross contribution of up to £5,000 into that pension. To do this you would need to make a net contribution to your pension (that is, the amount actually paid in by you) of £4,000. This contribution is made before the addition of the basic rate tax relief (£1,000) which the pension scheme will claim directly from HMRC. 

Even if you earn less than £3,600 you can still make a gross pension contribution of £3,600 (which is calculated as a £2,880 net contribution paid by you, plus £720 basic rate tax relief claimed by the pension scheme). 

In both of the cases described above you do not earn enough to pay any income tax as your income is less than your personal allowance.  However, this does not prevent the pension scheme claiming the tax relief. See also the heading below: Relief for non-earners.

  The basic rate tax relief on relief on pension contributions is calculated as 25% of the net pension contribution paid. For example, to make a gross pension contribution of £100 to your pension you would need to pay a net contribution of £80. The basic rate tax relief is calculated as 25% of £800, which is £20.  This is added to the £80 net contribution, making a total gross pension contribution of £100.  

Net pay scheme

If your pension is a workplace pension, then it might be a net pay scheme. If your pension scheme uses the net pay arrangement method, tax relief is given by deducting the gross pension contribution from your gross earnings before you pay any tax. Tax relief is given there and then through the payroll calculation because the pension contribution reduces your taxable earnings. Therefore, there is no tax to reclaim from HMRC because amount deducted from your earnings is the same as your gross pension contribution. 

  Net pay arrangements have previously meant that some lower-income pension savers have missed out on tax relief, as compared to those who save into a relief at source pension scheme. However, there are new rules that apply to pension contributions made using net pay arrangements by low earners in tax years starting from 2024/25 to help fix the problem. We include more information on our page Pension tax relief: problems for low earners.

You can read more detail about how tax relief is given in these different circumstances on our page How tax relief is given on pension contributions.

Salary sacrifice is another way that some people contribute to their pensions. However, please note that under a salary sacrifice scheme, the contributions are employer contributions rather than employee contributions.

Relief for non-earners

If you have no UK relevant earnings but wish to make contributions to a private pension, you can only receive tax relief on gross pension contributions up to £3,600 (£2,880 net) per tax year. If you do not pay any income tax this does not prevent the pension scheme claiming the basic rate tax relief from HMRC if it is operating a relief at source scheme.  This includes children – so, if a child has someone who would like to set up a pension scheme for them, that person can pay £2,880 net into the child’s pension and the pension scheme will claim the basic rate tax relief of £720, making a gross pension contribution of £3,600.

Note that this annual amount of £3,600 cannot be carried forward for use in a later tax year if it is fully or partly unused. 

Example – non-earner contributing to a pension 

Steven is a stay-at-home dad. He does not work in the 2026/27 tax year. He does, however, have some savings in a bank account and he wants to put some of the money into his personal pension.

Even though he does not have any relevant UK earnings in 2026/27, Steven can pay £2,880 into his personal pension. The scheme provider claims the basic rate tax relief of £720 from HMRC (this is calculated as 25% of the net contribution of £2,880), so £3,600 in total goes into Steven’s pension pot.

Amount of relief

Tax relief is available on your pension contributions at the highest rate of income tax that you pay. So, for non-Scottish taxpayers, this means:

  • Non-taxpayers (that is, people who earn under the personal allowance) – get no pension tax relief – unless they are in a relief at source scheme as explained above.
  • Basic-rate taxpayers get 20% pension tax relief
  • Higher-rate taxpayers get 40% pension tax relief
  • Additional-rate taxpayers get 45% pension tax relief

In Scotland, there are different income tax rates so pension tax relief is applied in a slightly different way – see our page How tax relief is given on pension contributions, and our page explaining Scottish income tax in more detail.

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