Pension tax relief calculator
Pension contributions get tax relief at the marginal rate: 20% for basic-rate taxpayers, 40% for higher rate and 45% for additional rate. Between £100,000 and £125,140 of income, a contribution can get about 60% relief as it restores the withdrawn Personal Allowance, under gov.uk's rules on pension tax relief.
How does pension tax relief work?
A pension contribution is taken from income before tax, so the tax that would have been paid on it comes back. At the basic rate that is 20%, at the higher rate 40%, and at the additional rate 45%, as set out in gov.uk's guidance on tax relief for private pension contributions. The higher the marginal rate, the more is added and the less the contribution costs.
What is the 60% pension tax trap?
Once income passes £100,000, the £12,570 Personal Allowance is removed by £1 for every £2 earned, disappearing entirely at £125,140, under gov.uk's Income Tax rates and Personal Allowances rules. That withdrawal adds an extra rate on top of the 40% band, so income in this range is taxed at a higher effective rate. A pension contribution that pulls income back below £100,000 reclaims the lost allowance, giving relief above the normal higher rate. For a higher earner this is generally the most efficient band in which to contribute.
What would an example contribution look like?
On £110,000, a £10,000 contribution brings income to £100,000 and restores the full allowance. The tax saved is about £6,000, so the £10,000 paid into the pension costs only £4,000, an effective 60.0%.
Common questions
How much tax relief do I get on my pension?
You get relief at your marginal rate: 20% for a basic-rate taxpayer, 40% for higher rate, 45% for additional rate. So a £1,000 gross contribution costs a higher-rate taxpayer £600 after relief.
What is the 60% pension tax trap?
Between £100,000 and £125,140 of income, your Personal Allowance is withdrawn by £1 for every £2 earned. That makes the effective tax rate on income in this band 60%. A pension contribution that brings you back under £100,000 gets that 60% back, so it is the most valuable place to contribute.
How do I claim higher-rate pension tax relief?
If you pay by relief at source, the basic 20% is added automatically, and you claim the extra 20% or 25% through Self Assessment or by contacting HMRC. Salary sacrifice and net-pay schemes give the full relief upfront.
How does pension tax relief work?
A pension contribution is treated as if it were paid before tax, so the tax that would have been due on it is refunded. Relief is given at the marginal rate that applies to the income given up: 20% for a basic-rate taxpayer, 40% for higher rate and 45% for additional rate, under gov.uk's rules on tax relief for private pension contributions.
What would an example contribution look like?
On a £110,000 income, a £10,000 contribution brings income down to £100,000 and restores the full Personal Allowance. The relief works out at about £6,000, so the contribution costs only £4,000, an effective 60.0%.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.