Relief by salary
Pension tax relief on a £150,000 salary
The calculator opens on £150,000 with £20,000 paid into a relief at source pension. Raise the amount to see the relief pass from the additional rate into the 60% band.
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 £13,729: 45% comes from tax and NI relief (additional rate taxpayer).
| You pay from your bank | £20,000 |
| Added by your provider (20%) | £5,000 |
| To claim back from HMRC | £6,271 |
| Personal Allowance won back | £70 |
| Cost to your take-home pay | £13,729 |
The provider only ever claims 20%. The rest comes back through your Self Assessment return or HMRC’s online claim, as a refund or a change to your tax code.
On £150,000 the income above £125,140, £24,860 of it, is taxed at the 45% additional rate in England, Wales and Northern Ireland, and there is no Personal Allowance (GOV.UK). Gross contributions up to £24,860 get 45% relief; the next £25,140 gets about 60%, because it brings back allowance, and anything beyond that 40%. By relief at source the provider adds 20% and you claim the rest: £20,000 from your bank becomes £25,000 in the pension and gives £6,271 to claim from HMRC, for a real cost of £13,729, 45.08% relief overall. GOV.UK's guidance gives the additional rate claim as 25% on the part of income taxed at 45% (pension tax relief). The annual allowance is still the full £60,000 on this salary unless other income or employer contributions take threshold income above £200,000 and adjusted income above £260,000.
Figures checked by Radif Partners · Editorial policy · How the sums are done
Relief at source in three bands
| Gross into the pension | Paid from your bank | Added by provider | Claimed from HMRC | Real cost | Relief |
|---|---|---|---|---|---|
| £10,000 | £8,000 | £2,000 | £2,500 | £5,500 | 45% |
| £24,860 | £19,888 | £4,972 | £6,215 | £13,673 | 45% |
| £35,000 | £28,000 | £7,000 | £10,271 | £17,729 | 49.35% |
| £50,000 | £40,000 | £10,000 | £16,271 | £23,729 | 52.54% |
| £60,000 | £48,000 | £12,000 | £18,271 | £29,729 | 50.45% |
The first £24,860 gross is relieved at 45%, which is the additional rate slice. The next £25,140 is relieved at 60% because it restores the Personal Allowance, so the average rate actually rises at first as the contribution grows. Past £50,000 the extra relief is 40%. A contribution of £50,000 gross therefore costs a little over half of its face value.
A Scottish taxpayer on £150,000
The top rate in Scotland is 48%, and the extra relief claimed on it is 28%. Paying £16,000 from the bank gives £20,000 in the pension and a claim of £5,600, against £5,000 elsewhere in the UK. The higher rate relief guide lists the rates.
The checks before a large payment
- Earnings: relief only on gross personal contributions up to £150,000.
- Annual allowance: £60,000 plus carry forward, with both taper tests on HMRC’s steps.
- Timing: the payment counts in the tax year it reaches the scheme, so a payment on 5 April counts for that year and one on 6 April for the next.
- The claim: through Self Assessment or HMRC’s service, up to four years back.
The annual allowance calculator and the carry forward calculator cover the second check; the £125,000 page shows the 60% band on its own.
A final point on cash flow: by relief at source the extra relief only arrives after the return is filed, often many months after the payment. A sacrifice or a net pay scheme gives the full relief in the same month. For a large one-off payment, ask whether the employer can take it through payroll as a bonus sacrifice instead.
Gift Aid and pensions at the same income
Gift Aid donations extend the basic rate band and reduce adjusted net income in the same way as relief at source pension contributions, so they also earn higher and additional rate relief. A donor and saver on £150,000 should count both when working out how far the Personal Allowance has been restored. The calculator only counts pension contributions; add gross Gift Aid to the contribution field to see the combined effect on Income Tax.