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Many higher rate taxpayers in the UK miss out on the extra tax relief they can get on their pension contributions. When you are a higher rate taxpayer, the relief is not automatic. You can claim it online to get another 20% tax relief, so you get up to 40% tax relief in total. Learn how to claim higher rate tax relief on pension contributions in this guide and everything else you need to know.
Summary
- You need to claim the extra tax relief on your pension contributions if you are a higher rate taxpayer.
- If you pay tax at a basic rate, claiming tax relief is usually done by your pension provider or employer.
- There are two main ways to claim online: self assessment and HMRC’s new online tool.
- You can backdate claiming missed tax reliefs for up to four years.
- The extra tax relief may be received in the form of a tax rebate, a change to your tax code, or a reduction in your tax bill.
- There are 2 main tax relief arrangements: net pay and relief at source. Check with your provider or employer which one your pension scheme uses.
- Even if you are a higher rate taxpayer, if you contribute to a workplace pension that uses net pay, the extra tax relief is automatic.
- Claiming higher rate tax relief can give you a total of 40% tax relief and approximately 66% added value.
Disclaimer: This article only offers general information, focusing on higher rate taxpayers in England, Northern Ireland, and Wales. Scotland has different tax rates. For accurate calculation and personalised guidance, seek professional tax and financial advice.
When Do You Need to Claim Pension Tax Relief?
Generally, you have to actively claim the extra tax relief on your pension contributions if you pay tax over the basic rate (higher and additional rate). Other reasons are that your pension scheme is not set up for automatic tax relief, or someone else pays into your pension.
There are two major ways pension tax relief are arranged.
Net Pay
Your pension contributions are deducted before income tax, which means you pay tax only on your income after your contributions have been accounted for. No tax relief to claim; your pension provider does it for you.
The most common pension scheme using net pay are workplace pensions. You do not have to claim higher rate tax relief on workplace pension contributions if it uses net pay arrangement.
Relief at Source
Your pension provider or employer claims tax relief only at a fixed rate of 20%, so you will have to claim the extra relief if you are a higher rate pension contributor. Personal pension, like Self-invested Personal Pension (SIPP), and stakeholder schemes typically use relief at source.
Be sure to check with your pension provider or employer about what tax relief your pension scheme uses. Some workplace pension schemes may need you to claim tax relief, such that your pension provider or employer ceases to claim on your behalf.
On the other hand, you will always have to claim higher rate tax relief on retirement annuity contracts. See relevant article: How to Avoid Paying Tax on Your Pension.
Methods to Claim Your Pension Tax Relief
There are two ways you can claim online: via HMRC tool or self-assessment tax return.
HMRC Online Tool
This was recently introduced in February 2025 to replace writing to HMRC. You will only have to log in with Government Gateway (or create one if you do not have) and enter required details. This option allows you to save progress automatically.
Self Assessment Tax Return
Go over the “tax reliefs” section and state your gross pension contribution amount. Be sure to include the initial 20% basic rate relief, one of the most common mistakes to avoid when claiming via self-assessments.
You can also claim by post, but only if you cannot claim online or if you are an agent acting for a client.
How Higher Rate Tax Relief Works
If you earn enough to pay higher-rate tax on a portion of your income and contribute to a pension, you can claim extra relief on the part of your contribution that corresponds to your higher-rate earnings.
You can get a total of up to 40% tax relief on your pension contributions (the initial 20% plus an extra 20%). This significantly boosts the value of your pension contributions. For example, a £10,000 contribution could effectively cost you only £6,000.
Tax relief is capped at 100% of your annual earnings or the annual pension allowance of £60,000. This annual allowance includes the payment you, your employer, and other people made into your pension. If you claim over this amount, HMRC will claw back the tax relief.
For defined benefits pensions (like final salary pensions or career average schemes), the annual allowance is not based on contributions paid in, but rather on how much your potential pension benefits have increased over the year.
Learn more about Tax Relief for Your Pension Contribution works.
Frequently Asked Questions
Can I claim tax relief on pension contributions for previous years?
Yes, you can backdate claims for higher-rate tax relief on pension contributions for up to the last four tax years, provided you were a higher earner in those years. Claiming works similarly to the current year via self-assessment or HMRC’s online tool.
Can other people pay into my pension, and what tax relief do I get?
Yes, others can contribute to your pension, and you will receive the tax relief as if you made the contribution yourself. You will get basic rate relief automatically, and higher-rate relief can be claimed by you based on your income.
What happens if I pay into someone else’s pension?
You need permission from the provider, and for tax relief purposes, contributions to someone else’s pension are treated as if made by them, based on their earnings. Your own tax relief eligibility remains tied to your own pension contributions and earnings.
How Many Years Back Can I Claim?
You can backdate claims for higher-rate or additional-rate pension tax relief for up to the last four tax years. This means you can currently claim for contributions made from the 2021/22 tax year onwards, provided you were a higher earner then.
Get Professional Tax Advice
That extra tax relief you are entitled to is not automatic; it requires a little action on your part. If you need personalised guidance, talk to our tax experts. Legend Financial is here to help you on how to claim higher rate tax relief on pension contributions, maiximise your retirement benefits, and more. Contact us today!
