Pension Tax Relief Calculator 2025/26
See exactly how much tax relief you get on your pension contributions. Compare relief at source, salary sacrifice and net pay arrangements to find the most tax-efficient method for your situation. Includes NI savings, higher rate relief and effective cost per pound saved.
Your Details
Total Annual Tax Saving
£0
Relief at source · 20% taxpayer
Annual Contribution
£0
Basic Rate Top-up
£0
Higher Rate Relief
£0
NI Saving
£0
Cost per £1 Saved
£0
Total in Pension Pot
£0
How Pension Tax Relief Works
Pension tax relief is one of the most valuable tax benefits in the UK. When you save into a pension, the government effectively refunds the income tax you paid on that money. For basic rate taxpayers using relief at source, every £80 you contribute becomes £100 in your pension — the provider claims the extra £20 from HMRC automatically.
Higher and additional rate taxpayers can claim extra relief through Self Assessment. A 40% taxpayer contributing £100 gross gets £40 of total relief — £20 added by the provider and £20 reclaimed via their tax return. Salary sacrifice is even more efficient because it also saves National Insurance at 8%, which relief at source does not.
The annual allowance for 2025/26 is £60,000, including employer contributions. For high earners with adjusted income above £260,000, this tapers down to a minimum of £10,000. Unused allowance from the previous three tax years can be carried forward.
What You Need to Know About Pension Relief
There are three main methods of pension tax relief in the UK. Relief at source is the most common for personal and workplace pensions — contributions come from net pay and the provider adds 20%. Net pay arrangements deduct contributions from gross pay before tax, giving full relief automatically. Salary sacrifice reduces your contractual salary, saving both Income Tax and NI.
The Lifetime Allowance was abolished from April 2024. However, the maximum tax-free lump sum is now capped at £268,275 (25% of the old £1,073,100 LTA) unless you have transitional protections. This means there is no longer a penalty for building a large pension pot, but the tax-free cash you can take is still limited.
Frequently Asked Questions
How does pension tax relief work in the UK?
When you contribute to a pension, the government adds money through tax relief. For every £80 you pay in net, the provider adds £20 as basic rate relief, making a gross contribution of £100. Higher and additional rate taxpayers claim extra relief through Self Assessment.
What is the difference between relief at source and salary sacrifice?
With relief at source, contributions come from net pay and the provider reclaims 20% from HMRC. With salary sacrifice, your contractual salary is reduced before tax and NI are calculated, saving both Income Tax and National Insurance on the sacrificed amount.
What is the pension annual allowance for 2025/26?
The annual allowance is £60,000. This is the maximum pension input including employer contributions that benefits from tax relief. For high earners with adjusted income above £260,000, it tapers to a minimum of £10,000.
Can I carry forward unused pension allowance?
Yes. You can carry forward unused annual allowance from the previous three tax years, provided you were a member of a registered pension scheme. You must use the current year's allowance first before dipping into previous years.
How much NI do I save with salary sacrifice?
With salary sacrifice you save NI at your marginal rate. For 2025/26, employees pay 8% on earnings between £12,570 and £50,270, and 2% above that. This means salary sacrifice saves an extra 8% compared to relief at source for most taxpayers.
Do I need to claim higher rate pension tax relief?
If you use relief at source, basic rate relief is added automatically. Higher and additional rate taxpayers must claim the extra 20% or 25% through Self Assessment. With salary sacrifice or net pay, full relief is given automatically through payroll.
Related Calculators
Income Tax Calculator
Calculate your full take-home pay after tax, NI and deductions.
National Insurance Calculator
Calculate employee and employer NI contributions for 2025/26.
Bonus Tax Calculator
See how much of your bonus you take home after tax and NI.
Pension Calculator
Project your pension pot value at retirement with contributions and growth.