Helping you to save for retirement
Pension tax relief is intended to help you save for retirement with money that would otherwise have gone to the tax man. This doesn’t mean you won’t have to pay tax on that money in the future, simply that you don’t have to pay tax on it now.
For example, a £1 contribution today costs you 80p if you’re a basic-rate taxpayer, as little as 60p if you’re a higher-rate taxpayer and 55p if you pay additional-rate tax. Exactly how it works will depend on the way your pension scheme operates its tax relief. Rates of tax relief for Scottish Residents may differ to the rest of the UK.
You’ll only get tax relief on contributions up to the amount you’ve earned in any given tax year. The amount of pension tax relief also depends on what rate of income tax you pay and the pension allowances you have available. You won’t get tax relief on any contributions made by an employer including any paid via a salary sacrifice arrangement.