Pension tax relief

How to get up to a 45% boost from the government

Pension tax relief explained

To help you to save toward your retirement, the government gives you money each time you make a payment to your pension. This is known as pension tax relief.

The amount of tax relief you get usually depends on the rate of income tax you pay. If you’re a Scottish taxpayer, tax rates and bands differ, and so different rates of tax relief apply.

An extra20%in basic-rate tax relief

Basic-rate taxpayers and non-earners

The government will always give you 20% in basic-rate tax relief when you add money to your pension. Even if you don’t pay tax or are a non-earner.

For example, if you added £800 to your pension, the government will add an extra £200 in tax relief.

Up to45%in higher-rate tax relief

Higher and additional-rate taxpayers

If you’re a higher-rate taxpayer, you can get up to 40% tax relief. Meaning a £10,000 pension payment, could cost you as little as £6,000.

If you’re an additional-rate taxpayer, you can get up to 45%.

Just be aware, you must pay sufficient tax at the higher or additional rate to claim the full 40% or 45% tax relief.

Pension tax relief calculator

Calculate how much tax relief you could get from your pension contributions.

I pay income tax in Scotland*

This year I can contribute

My annual taxable income is

*For more details of the Scottish rate of income tax please see our Scottish income tax page.

Are there any rules or limits on pension tax relief?

You must be under age 75 to get tax relief. There are also limits on how much tax relief you can receive and how much you can pay into a pension.

You’ll only get tax relief on personal pension contributions up to 100% of your UK earnings, or £3,600 if this is greater (if you’re a low or non-earner).

Let’s say you earned £35,000 a year. The maximum you could pay in across all your pensions and benefit from tax relief would be £35,000. You would pay in £28,000 and the government would add £7,000 in basic-rate tax relief on top to bring the total contribution to £35,000.

Your pension contributions, including any made by your employer, are also limited by the annual allowance which is currently £60,000 each tax year for most people. If you’ve already taken money out of a pension, or you’re a higher earner, your annual allowance could be much lower.

How much can I pay into a pension?

How to claim pension tax relief

For personal pensions (such as the HL SIPP), and certain workplace pensions, basic-rate tax relief is usually claimed back automatically by your pension provider. If you pay higher rates of tax, you'll usually need to complete a self-assessment tax return to claim higher-rate tax relief. Then the money will be paid to you personally and not into your pension. Read our guide to claiming back higher-rate tax relief for more information.

For other pension schemes, tax relief is typically received by reducing the amount of income tax you pay.

Make the most of SIPP tax relief

If you open an award-winning HL Self-Invested Personal Pension, you can look forward to the main pension tax benefits. As well as getting tax relief, you can shelter your money from UK income and capital gains tax. Plus you’ll benefit from:

Security - We're a FTSE-listed company, trusted by 1.8 million clients and regulated by the Financial Conduct Authority.
Award-winning service - Best Buy Pension 2024 from the Boring Money Awards.
Ease - Check your pension anytime online or with the HL app whenever you like.
Ongoing support - Get help from our UK-based helpdesk and the answers to your questions no matter how big or small.

Tell me more about the HL SIPP

Guide to SIPPs

Download this essential guide to learn more about SIPP tax benefits and how pension tax relief works.

Download the guide

Two ways to add money to your SIPP

The quickest way to top up your account is online, you’ll just need your debit card or bank account details to hand.

Make a lump sum payment

You can make a one-off lump sum payment from as little as £100. You only need to pay £80, and we’ll claim 20% tax relief to take the total payment to £100.

Start or increase a regular saving

Set up monthly payments from as little as £25 (pay £20, and we’ll claim £5 in tax relief). Or increase an existing direct debit instruction.

This video has various screen captures, along with a voice over. Descriptions of what is shown in the video are described below:

Title: How to add money to your account in three simple steps

"Log into your account using your username, date of birth, online password and three digits from your secure number. (Video shows the log in steps)

Now you can see your portfolio showing your accounts and their current value. (Video shows logged in portfolio summary page)

Select the 'Top up' button on the account you want to make a debit card payment in to. (Video shows cursor selecting 'Top up' for a Stocks & Shares ISA, as an example)

(Video now shows a payment screen which specfies how you wish to add money - a cash lump sum, regular monthly savings or both, along with a debit card payment details form) Fill in your details and make a debit card payment directly to your account.

If this is a subscription to an ISA or a SIPP then any money added to these accounts will count towards your allowance for that tax year. If you have yet to pay into your ISA in this tax year or have not contributed recently, you will have an additional page to refresh your knowledge on the ISA declarations and terms and conditions. (Video shows this additional page)

You will then see a bank verification message. If your request has been authorised you will receive confirmation of your payment details". (Video shows an example of the verification message and then shows a page where you can choose your investments, funds, shares or trusts.)

This video hopefully helps you understand the process, but it should not be taken as personal advice. Please remember money invested in the stock market can fall in value so you could get back less than you invest.

Frequently asked questions

To view your contribution history online, log in and select your SIPP account. Click the ‘Transaction History’ tab, then ‘View all contributions’. You’ll then be able to select your desired tax year and view the contributions made in that tax year.

Alternatively, you can select the ‘Portfolio history’ from the overview page, then select the Spring investments report from the relevant year on the right-hand side. This contains a statement of your pension contributions for the previous tax year, usually at the end of the report.
Your employer can add money to your HL SIPP by bank transfer and/or Direct Debit. They can also make a payment over the phone with a company debit card by calling us.

Employer contributions are paid gross, so basic-rate tax relief is not claimed on the amount they contribute. If you’re a limited company owner, these contributions are normally treated as a valid business expense to be offset against the profits of the company, reducing any corporation tax otherwise payable. If you’re at all unsure, check with your company accountant.

Remember tax rules can change and the value of any benefits depends on your circumstances.

Make an employer contribution
We request basic-rate tax relief from HM Revenue & Customs (HMRC) on a monthly basis for all personal contributions made between the 6th of the previous month and the 5th of the current month (inclusive). We receive the tax relief from HMRC and apply it to clients' accounts on the 21st of the following month (or the next working day if the 21st is not one), so this is always 6-11 weeks after the date of the initial contribution.

To view the dates tax relief will be received, download our tax relief calendar.
Any higher rates of tax relief on your pension contributions can be claimed from HMRC.

If you want to claim higher-rate tax relief, or are a Scottish taxpayer looking to claim further tax relief, you can do so through your self-assessment tax return or by calling or writing to HMRC. If you live in England, Wales or Northern Ireland and you want to claim additional-rate tax relief you can only do this through your self-assessment tax return. Our free guide to claiming higher rate tax relief provides more information and includes a letter template.

As this money is credited back to you personally and not your pension, Hargreaves Lansdown is unable to claim it on your behalf. The amount of additional relief you can claim will depend on how much tax you pay at the higher rates.

If you forgot to claim tax relief for a previous year, you can do so up to four years after the end of the tax year you are claiming for.

Tax relief guide

More information and useful tips.

Download the guide

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The Personal Finance Awards 2023/24

Help and support

Take a look at our most frequently asked questions for quick answers.

If you need more assistance or have specific questions, please contact us.

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