How much tax relief do I get on pension contributions?

Income Tax relief at your top rate - 20%, 40% or 45% outside Scotland - whether your scheme uses relief at source or a net pay arrangement. Salary sacrifice also saves employee National Insurance, so a basic-rate taxpayer saves 28% (20% + 8% NI) and a higher-rate taxpayer above the Upper Earnings Limit saves 42% (40% + 2% NI). This calculator models salary sacrifice.

Is salary sacrifice better than relief-at-source?

Usually, by the employee National Insurance it saves - 8% of the contribution in the main NI band, 2% above the Upper Earnings Limit. Your employer also saves its own 15% NI, and some employers pay part of that into your pension. Relief at source gives Income Tax relief only: the provider adds 20% and you claim any higher-rate relief from HMRC. From April 2029 only the first £2,000 a year of pension contributions made by salary sacrifice will be free of NI.

What is the annual pension allowance?

£60,000 per tax year for 2026/27 (raised from £40,000 in April 2023). It tapers by £1 for every £2 of adjusted income over £260,000, down to £10,000, but only if your threshold income is also over £200,000. Pension savings above your allowance, after any unused allowance carried forward, trigger the annual allowance charge.

Can I claim higher-rate relief if my employer only does basic-rate?

Yes - if your scheme uses relief at source and you pay tax above the basic rate, you claim the extra relief yourself, on your Self Assessment return or through HMRC if you do not file one. Salary sacrifice and net pay arrangements give the full Income Tax relief automatically through payroll.

Does this include employer contributions?

No - we model only your personal contribution. Employer contributions go on top and aren't treated as your income.

8% Pension Contribution on £45,000 UK 2026/27

Contributing 8% of a £45,000 gross salary via salary sacrifice puts £3,600 into your pension pot each year, but only costs £2,592 from take-home - a 28% relief rate on the contribution from Income Tax and National Insurance. Under a net pay arrangement or relief at source only the Income Tax relief applies.

Goes into pension

£3,600

Actual cost from take-home

£2,592

Tax + NI relief

£1,008

All common contribution rates on £45,000

Contribution %	Gross contribution	Net cost	Relief %
3%	£1,350	£972	28%
5%	£2,250	£1,620	28%
8%	£3,600	£2,592	28%
10%	£4,500	£3,240	28%
12.5%	£5,625	£4,050	28%
15%	£6,750	£4,860	28%

All rows assume salary sacrifice, England, Wales and Northern Ireland Income Tax bands, 2026/27. "Relief %" is the share of the contribution returned as Income Tax plus employee National Insurance.

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FAQ

How much tax relief do I get on pension contributions?: Income Tax relief at your top rate - 20%, 40% or 45% outside Scotland - whether your scheme uses relief at source or a net pay arrangement. Salary sacrifice also saves employee National Insurance, so a basic-rate taxpayer saves 28% (20% + 8% NI) and a higher-rate taxpayer above the Upper Earnings Limit saves 42% (40% + 2% NI). This calculator models salary sacrifice.
Is salary sacrifice better than relief-at-source?: Usually, by the employee National Insurance it saves - 8% of the contribution in the main NI band, 2% above the Upper Earnings Limit. Your employer also saves its own 15% NI, and some employers pay part of that into your pension. Relief at source gives Income Tax relief only: the provider adds 20% and you claim any higher-rate relief from HMRC. From April 2029 only the first £2,000 a year of pension contributions made by salary sacrifice will be free of NI.
What is the annual pension allowance?: £60,000 per tax year for 2026/27 (raised from £40,000 in April 2023). It tapers by £1 for every £2 of adjusted income over £260,000, down to £10,000, but only if your threshold income is also over £200,000. Pension savings above your allowance, after any unused allowance carried forward, trigger the annual allowance charge.
Can I claim higher-rate relief if my employer only does basic-rate?: Yes - if your scheme uses relief at source and you pay tax above the basic rate, you claim the extra relief yourself, on your Self Assessment return or through HMRC if you do not file one. Salary sacrifice and net pay arrangements give the full Income Tax relief automatically through payroll.
Does this include employer contributions?: No - we model only your personal contribution. Employer contributions go on top and aren't treated as your income.