Relief by salary
Pension tax relief on a £125,000 salary
The calculator opens on £125,000 with £25,000 of salary sacrifice, roughly the amount that restores the whole Personal Allowance. Lower it, or switch method, to see the relief move.
Independent site, not a government service. Relief is claimed through your pension provider, your payroll or HMRC (Self Assessment or the GOV.UK claim service).
Example, not your result yet· change a figure to see yours
Goes into your pension
£25,000
Costs you £9,500: 62% comes from tax and NI relief (higher rate taxpayer).
| Salary given up | £25,000 |
| Income Tax saved | £15,000 |
| Employee NI saved | £500 |
| Personal Allowance won back | £12,500 |
| Cost to your take-home pay | £9,500 |
At £125,000 almost the whole Personal Allowance has gone: it falls by £1 for every £2 of adjusted net income above £100,000 and reaches nothing at £125,140 (GOV.UK). Only £70 of it is left. A gross pension contribution of £25,000 brings adjusted net income back to £100,000, wins back £12,500 of allowance and saves £15,000 of Income Tax: a relief rate of 60%. Through salary sacrifice the employee also saves 2% NI, and the employer 15%. Beyond £25,000, further contributions get 40% relief, as long as all pension savings stay within the £60,000 annual allowance plus any unused allowance carried forward from the three previous years (HMRC, unused annual allowances). Threshold income here is far below the £200,000 at which the annual allowance can be tapered, so the full allowance is available.
Figures checked by Radif Partners · Editorial policy · How the sums are done
Relief by size of contribution
| Gross contribution | Income Tax saved | Allowance won back | Net pay cost | Sacrifice cost | Relief |
|---|---|---|---|---|---|
| £5,000 | £3,000 | £2,500 | £2,000 | £1,900 | 60% |
| £10,000 | £6,000 | £5,000 | £4,000 | £3,800 | 60% |
| £15,000 | £9,000 | £7,500 | £6,000 | £5,700 | 60% |
| £25,140 | £15,056 | £12,500 | £10,084 | £9,581 | 59.89% |
| £35,000 | £19,000 | £12,500 | £16,000 | £15,300 | 54.29% |
| £60,000 | £29,000 | £12,500 | £31,000 | £29,800 | 48.33% |
The relief rate stays at 60% up to £25,140 because every pound in that range sits in the taper. After that it falls toward 40% as the extra contributions come out of income taxed at the higher rate with a full allowance already restored. At £60,000, the full standard annual allowance, the average relief is still close to half.
Using carry forward for a bigger payment
Someone on £125,000 who saved £20,000, £25,000 and £30,000 in the last three tax years, all with a £60,000 allowance, has £165,000 of allowance available in 2026/27. A payment of £100,000 would fit, using £40,000 from 2023/24 first under section 228A of the Finance Act 2004. Relief on a personal contribution is still capped at earnings of £125,000.
NI at this salary
Employee NI above the £50,270 upper earnings limit is 2% (HMRC, rates for employers), so sacrifice only shaves a little more off the cost for the employee. The employer saves 15% on every pound sacrificed until April 2029, when the saving stops above £2,000. The guide to contributions over £100,000 sets out the timing questions, and the £150,000 page looks at relief at the additional rate.
A Scottish taxpayer on £125,000
In Scotland the same salary is taxed at 45% between £75,001 and £125,140, and the Personal Allowance taper works the same way, so relief in the taper band is about 67%, higher still. A contribution that brings adjusted net income back to £100,000 saves £16,875 of Scottish Income Tax on £25,000 gross. Set the nation field to Scotland in the calculator above to test your own figures.
Why the method matters less here
At this income relief at source, net pay and salary sacrifice all give 60% relief in the taper band once the claim is made. Relief at source leaves you to claim 40% of the gross amount yourself through Self Assessment, which is a large sum to wait for: £10,000 on £20,000 paid from the bank. Net pay and sacrifice give the relief on payday. The employer's choice of scheme decides which you can use for workplace money; a SIPP is always relief at source.