Understanding pension contribution tax relief
This tool illustrates relief at source: you pay a net contribution and the provider claims basic-rate relief to add to the pension. Enter the contribution on the correct basis. Your cash payment and the gross amount credited are not the same number.
Worked example
A payment of £800 can become a £1,000 gross contribution with a £200 provider top-up, assuming eligibility. If the full £1,000 qualifies for 40% relief, another £200 may be claimable from HMRC. The effective personal cost is then £600, but the pension still receives £1,000: the additional relief is not automatically deposited into it.
Interpreting the result
Higher-rate relief depends on how much income actually falls within eligible bands. A higher-rate taxpayer cannot necessarily claim that higher rate on every pound contributed. The chart separates the provider top-up from potential additional relief so that they are not counted twice.
Checks before relying on the numbers
This illustration does not cover every contribution method. Salary sacrifice and net-pay arrangements work differently. Earnings limits, annual allowances, previous pension access and personal circumstances can restrict relief. Check the calculator’s stated scope and your provider’s contribution method before using the result for a payment or tax claim.
Read HMRC guidance on pension tax relief →
Personal Fortune · Updated 25 September 2026. Educational illustrations, not personal financial advice. Our approach and corrections.