Learn how to claim pension tax relief in the UK for 2024/25. Discover the difference between Net Pay & Relief at Source, how higher earners can reclaim extra tax relief, and key HMRC rules.
How to Claim Pension Tax Relief in the UK (2024/25) – A Complete Guide
Saving into a pension is one of the most tax-efficient ways to prepare for retirement, thanks to pension tax relief offered by HMRC. But many people, particularly higher-rate and additional-rate taxpayers, miss out on extra tax relief they are entitled to.
This guide explains:
✅ How pension tax relief works
✅ The difference between Relief at Source & Net Pay schemes
✅ How to claim extra tax relief if you’re a higher-rate taxpayer
✅ Step-by-step claim methods (PAYE tax code adjustment & Self Assessment)
Let’s get started! 🚀
What is Pension Tax Relief?
Pension tax relief allows you to save for retirement more efficiently by reducing the amount of income tax you pay.
🔹 For every £80 you contribute, HMRC adds £20, making it a £100 total contribution.
🔹 Higher-rate taxpayers (40%) & additional-rate taxpayers (45%) may be entitled to extra tax relief but must claim it separately.
This tax relief is applied differently depending on how your workplace pension scheme operates.
Relief at Source vs. Net Pay – Which Scheme Are You In?
Option 1 – Relief at Source (Most Common for Personal & Workplace Pensions)
✅ Your pension provider automatically adds 20% tax relief to your contributions.
✅ You pay £80, and HMRC tops it up to £100.
✅ If you are a higher-rate taxpayer (40%) or additional-rate taxpayer (45%), you must claim extra relief manually.
Option 2 – Net Pay Arrangement (Mostly for Workplace Pensions)
✅ Your contributions are deducted before tax, meaning full tax relief is applied at your highest rate automatically.
✅ You don’t need to claim extra tax relief.
✅ No relief is given if you’re a non-taxpayer (earning under £12,570).
🔎 Not sure which scheme applies to you? Check with your employer or pension provider!
How to Claim Additional Pension Tax Relief (40% & 45% Taxpayers)
If you are a higher-rate (40%) or additional-rate (45%) taxpayer, your extra tax relief is NOT automatically applied under Relief at Source schemes.
Extra relief to claim:
- Higher-rate taxpayers (40%) – Can claim an extra 20%
- Additional-rate taxpayers (45%) – Can claim an extra 25%
Example for a Higher-Rate Taxpayer:
🔹 You contribute £8,000 to your pension.
🔹 Your provider adds £2,000 (20% relief) → Total contribution: £10,000.
🔹 But as a 40% taxpayer, you can claim an extra 20% relief:
- £10,000 × 20% = £2,000 extra tax relief
- This is claimed via tax code adjustment or Self Assessment.
How to Claim Pension Tax Relief from HMRC
1. Claim via PAYE Tax Code Adjustment (For Employees Only)
🚀 Best if you want tax relief spread throughout the year
✅ Contact HMRC via your Personal Tax Account or by calling 0300 200 3300.
✅ Provide details of your gross annual pension contribution (the amount including 20% tax relief).
✅ HMRC will adjust your tax code, reducing the tax you pay each month.
2. Claim via Self Assessment (Best for Large or One-Off Contributions)
✅ If you already file a Self Assessment tax return, you can claim extra relief there.
✅ On the return, enter your total gross pension contributions (including 20% relief).
✅ HMRC will refund tax relief as:
- A rebate into your bank account 💰
- A PAYE tax code adjustment (reducing future tax)
3. Claim for Previous Tax Years (Up to 4 Years Back)
You can backdate pension tax relief claims for up to 4 years.
🔹 Submit a P87 form or amend past Self Assessment returns.
Frequently Asked Questions (FAQs)
1. How do I check if I’m getting the correct pension tax relief?
Check your payslip (for Net Pay schemes) or ask your pension provider (for Relief at Source). If you pay 40% or 45% tax, you likely need to claim extra relief manually.
2. Can I claim pension tax relief if I don’t pay tax?
Yes! If you’re a non-taxpayer (earning under £12,570), you can still get 20% relief on contributions up to £2,880 per year (£3,600 gross).
3. I’m self-employed – how do I claim pension tax relief?
As a self-employed person, you must claim tax relief via Self Assessment by entering your gross contributions (including 20% relief) in your return.
4. Can I claim extra relief if I pay into multiple pension schemes?
Yes, as long as your total contributions stay within the Annual Allowance (£60,000 for 2024/25). You can claim higher-rate tax relief on all eligible contributions.
5. What happens if I contribute more than my Annual Allowance?
You may have to pay a tax charge on any contributions above £60,000, unless you can use carry forward allowances from the past 3 years.
Key Takeaways – Maximise Your Pension Tax Relief!
✅ HMRC automatically adds 20% tax relief to most pensions, but higher earners (40% & 45% tax) must claim extra relief.
✅ Net Pay schemes apply full relief automatically, but Relief at Source requires manual claims for higher-rate relief.
✅ Claim tax relief via:
- Tax code adjustment (PAYE employees)
- Self Assessment (self-employed & high earners)
✅ Backdate claims up to 4 years if you’ve missed out on tax relief.
By ensuring you claim all available tax relief, you can boost your retirement savings and reduce your tax bill.
Need Help Claiming Pension Tax Relief?
If you’re unsure whether you’re receiving all your tax relief, contact:
🔹 HMRC via your online tax account
🔹 A tax adviser or financial planner
Proper tax planning today ensures a financially secure retirement tomorrow! 🚀