Tax relief for pension contributions

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Tax relief for pension contributions
  • Conditions for tax relief to be claimed
  • Relevant UK individual
  • Maximum age
  • Annual allowance
  • Amount of contributions ― limit ignoring income
  • Amount of contributions ― limited by income
  • Income tax relief for contributions made net
  • Scottish taxpayers ― income tax relief
  • Interaction with personal allowances
  • More...

The completion of boxes 1 to 4 at the top of page TR4 of the main tax return allows a taxpayer to claim tax relief on pension contributions made in the tax year.

Most contributions to registered pension schemes are paid net of basic rate tax relief (via a relief at source scheme), so the only additional relief sought by entry on the tax return is relief at higher rates of tax.

For Scottish taxpayers, relief at source is at the Scottish basic rate. From 2017/18 onwards, due to the divergence in the Scottish bands and rates from the rest of the UK, multiple bands need to be extended where pension contributions are paid to relief at source schemes. Scottish tax bands need to be extended for calculating tax on non-savings, non-dividend income. UK tax bands need to be extended for calculating tax on savings and dividend income of Scottish taxpayers. This is discussed further below.

Contributions are paid gross to occupational schemes that use a net pay arrangement.

For the meaning of a registered pension scheme, relief at source scheme and net pay arrangement, see the Pensions glossary of terms guidance note.

The tax relief available for pension contributions is summarised in the Flowchart ― tax relief for contributions to a UK registered pension scheme.

Conditions for tax relief to be claimed

Relevant UK individual

To obtain tax relief on pension contributions, the scheme member must be a relevant UK individual. This means that the individual must:

  1. have relevant UK earnings chargeable to tax in the year

  2. be resident in the UK at some point during the tax year

  3. have been resident when they became a member of the pension scheme and at some point in the last five tax years immediately before the year in which the contributions are paid, or

  4. have, or their spouse or civil partner must have, earnings from overseas Crown employment which is taxable in the UK during the year

FA 2004, s 189

Note that the individual

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