How does tax relief on pensions work?19 March 2018
You pay contributions net of basic rate income tax to a relief at source scheme and we collect the tax relief from HMRC. Basic rate tax relief is currently 20%. So, if you contribute £80 a month, £100 will be invested automatically in your plan – that’s an additional £20 at no extra cost to you.
If you pay tax at a rate higher than basic rate, you can claim the extra relief from HMRC on your yearly tax return or by asking your tax office to adjust your tax code. The value of any tax relief depends on your individual circumstances. There are maximum amounts that can benefit from tax relief in a tax year: £3,600 or your relevant UK earnings for that tax year, whichever is greater.
This information is based on our understanding of current, taxation law and HMRC practice, which may change.