Pension tax relief calculator
See what goes into your pension, what it really costs your take-home pay once tax relief is counted, and how relief at source, net pay and salary sacrifice compare, under the 2026/27 rules for England, Wales, Northern Ireland and Scotland.
Rules for tax year 2026/27Checked Free, no sign-up
Example figures
Change any to use yours
Into your pension a year
£4,800
£3,000 from you and £1,800 from your employer. Your contribution costs £1,800 of take-home pay once relief is counted, so each £1 you put in costs you 60p.
- Cost to your take-home
- £1,800
- Effective relief
- 40%
- Relief to claim back
- £600
- Your annual allowance
- £60,000
A year, against paying nothing in
Of your contribution, saved in tax, NI, loans and charges
Through self-assessment or a tax code change, not your payslip
Of which £4,800 used here
Where the money in your pension comes from
- From your take-home pay£1,80038%
- Tax relief and other savings£1,20025%
- Your employer£1,80038%
Relief at source | Net pay | Salary sacrifice | |
|---|---|---|---|
| Into your pension | £4,800 | £4,800 | £4,800 |
| Take-home on payslips | £42,957 | £43,557 | £43,617 |
| Relief claimed back | £600 | £0 | £0 |
| Cost after relief | £1,800 | £1,800 | £1,740 |
| Effective relief | 40% | 40% | 42% |
An illustration for the 2026/27 tax year: one job on a steady salary, the standard 1257L tax code and no other income.
Relief at source: £2,400 comes out of your pay and the provider adds 20% relief to make £3,000.
Employer contributions are on your whole salary before any sacrifice. Many schemes use qualifying earnings or a different basis; your scheme rules say which.
Track your pension alongside your ISAs, savings and property, and see it grow month by month in Aureli.
Try Aureli freeHow this works
The calculator works out your take-home pay twice: once with no contribution from you, and once with it. The difference, after any relief you claim back through self-assessment and any High Income Child Benefit Charge you no longer pay, is what the contribution costs you. Effective relief is the share of your contribution that didn't come out of your pocket. It does the same for all three ways of contributing, so they can be compared on the same amount.
On a £60,000 salary paying 5% into a relief-at-source pension, £3,000 a year reaches the pot. £2,400 comes out of take-home pay, the provider adds £600, and £600 more is claimed back as a higher-rate taxpayer, so the contribution costs £1,800: relief of 40%. Through salary sacrifice the same £3,000 would cost £1,740, because National Insurance is saved too.
Assumptions
- One job on a steady salary, with the standard 1257L tax code, category A National Insurance and no other income.
- Employer contributions are a share of the whole salary before any sacrifice, and count towards the annual allowance. An employer's National Insurance saving is 15% of sacrificed pay above the secondary threshold.
- The High Income Child Benefit Charge is worked out on your adjusted net income, as if you're the partner with the higher income.
- The annual allowance taper assumes any salary sacrifice was set up after 8 July 2015, so it counts towards threshold income. Carry forward of unused allowance isn't included.
- Marriage allowance, Gift Aid, benefits in kind and postgraduate loans aren't included. Payroll works out each pay packet on its own, so a bonus or a change of pay moves the figures.
Data sources
- GOV.UK: Tax on your private pension contributions
- GOV.UK: Annual allowance
- GOV.UK: Salary sacrifice reform for pension contributions from April 2029
- GOV.UK: High Income Child Benefit Charge
- GOV.UK: Child Benefit rates
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: National Insurance rates and categories
Three ways to pay in
The same contribution can reach a pension in three ways, and each treats tax, National Insurance and student loans differently.
- Relief at source: you pay from take-home pay and the provider adds 20% basic-rate relief. Higher and additional-rate taxpayers claim the rest back. Personal pensions and SIPPs work this way, and so do many workplace schemes. Non-taxpayers still get the 20%.
- Net pay: your employer takes the contribution from pay before income tax, so you get relief at your top rate straight away. National Insurance and student loans are still charged on it, and anyone earning under the personal allowance gets no relief.
- Salary sacrifice: you give up part of your salary and your employer pays it into the pension. No income tax, National Insurance or student loan repayment is due on the sacrificed pay, and your employer saves 15% National Insurance on it too.
Adjusted net income and the annual allowance
Adjusted net income is what the £100,000 personal allowance taper and the £60,000 Child Benefit charge are measured on: taxable income less grossed-up relief-at-source contributions and Gift Aid. Every way of contributing lowers it by the full amount going in.
The annual allowance taper uses two other measures. Threshold income is net income less your own contributions, with salary sacrifice added back. Adjusted income adds every pension contribution back in, your employer's included, so contributing doesn't lower it. The allowance only tapers when threshold income is over £200,000 and adjusted income over £260,000.
Questions
How does pension tax relief work?
Money paid into a pension comes from pay before income tax, so the tax you'd have paid on it goes into the pension instead. Under relief at source the provider claims 20% from HMRC, so £80 from your pay becomes £100. Under net pay and salary sacrifice the contribution is taken before tax, so relief comes at your highest rate on the payslip. Relief is limited to contributions up to your earnings for the year and to the £60,000 annual allowance.
How do I claim higher-rate tax relief on pension contributions?
Only relief-at-source contributions need a claim. Higher and additional-rate taxpayers, and Scottish taxpayers above the basic rate, claim the extra through a self-assessment return, or by asking HMRC to adjust their tax code. Claims can go back four tax years. Net pay and salary sacrifice contributions get the full relief through payroll.
Is salary sacrifice better than relief at source?
For the same amount into the pension, salary sacrifice costs less take-home pay, because the sacrificed pay isn't charged National Insurance (8%, or 2% above £50,270) or student loan repayments, and some employers add their own 15% NI saving. Against that, a lower salary can mean lower statutory pay and smaller mortgage or life cover multiples. Which suits you depends on your circumstances.
What is changing for salary sacrifice in 2029?
The Autumn Budget 2025 announced, and the National Insurance Contributions (Employer Pensions Contributions) Act 2026 legislates, that from 6 April 2029 only the first £2,000 a year of pension contributions made by salary sacrifice will be free of National Insurance. Above that, employee and employer National Insurance will apply, while income tax relief stays the same. The detail is still to come in regulations, and nothing changes before April 2029, so the figures here don't include it.
How can pension contributions help in the 60% tax band?
Between £100,000 and £125,140, the personal allowance falls by £1 for every £2 of adjusted net income, so income in that range is taxed at an effective 60%. Pension contributions lower adjusted net income: each £1 contributed in that range saves around 60p in income tax, and salary sacrifice adds National Insurance on top. Bringing adjusted net income down to £100,000 restores the full personal allowance.
Can pension contributions reduce the High Income Child Benefit Charge?
Yes. The charge takes back 1% of Child Benefit for every £200 of adjusted net income over £60,000, and all of it by £80,000. Contributions lower adjusted net income, so they can reduce or clear the charge. In 2026/27 Child Benefit is £27.05 a week for the eldest child and £17.90 for each other child.
How much can I pay into my pension with tax relief?
Up to 100% of your earnings, within the £60,000 annual allowance, which counts your contributions, relief and your employer's. It tapers by £1 for every £2 of adjusted income over £260,000, down to £10,000, for anyone whose threshold income is also over £200,000. Unused allowance from the previous three years can be carried forward.
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