Pension tax relief calculator
The same contribution is worth wildly different amounts to different people — and to the same person under a different employer. At £65,000 a year, putting £5,000 into your pension costs you £2,900 through salary sacrifice, £3,000 through a net pay arrangement, and £4,000 through relief at source if you never claim the rest of what you are owed. Nothing about you has changed. Only the plumbing.
Three schemes, three answers
There are three ways a UK employer can run a workplace pension, and most employees have never been told which one they are in. It is not a technicality: it decides whether your contribution saves National Insurance, whether it reduces your student loan repayment, and whether the higher-rate part of your relief turns up automatically or has to be asked for.
- Salary sacrifice
- You give up salary before it is ever paid to you
- Net pay arrangement
- Deducted from gross pay before income tax, after National Insurance
- Relief at source
- Paid out of pay that has already been taxed, then topped up
Your payslip usually gives it away. Salary sacrifice shows a reduced gross figure with no separate pension line. A net pay arrangement shows the deduction above the tax line. Relief at source shows it below, alongside your net pay. If in doubt, ask payroll which one applies — it is a one-line question with a several-hundred-pound answer.
Compare all three for your numbers
Enter what goes into your pension and this works out what each route costs your take-home pay for the same money in the pot. Everything updates as you type.
Cheapest route for you
—
| For the same pension pot | Salary sacrifice | Net pay arrangement | Relief at source |
|---|---|---|---|
| Into your pensionThe same gross amount in all three columns. That is what makes them comparable | — | — | — |
| Taken from your payBefore tax in the first two columns, after tax in the third | — | — | — |
| Basic rate top-up added by your provider | — | — | — |
| Income tax saved | — | — | — |
| Employee National Insurance saved | — | — | — |
| Student loan repayment saved | — | — | — |
| Child benefit charge saved | — | — | — |
| What it actually costs your take-home | — | — | — |
| Effective rate of relief | — | — | — |
| Relief you have to claim yourselfIncluded in the figures above. It does not arrive unless you ask | — | — | — |
| Employer's National Insurance savedNot your money, but usually the reason a sacrifice scheme exists at all | — | — | — |
The relief nobody claims
How this was calculated
Why relief at source loses money quietly
Under relief at source your contribution is taken from pay that has already been taxed. Your provider then reclaims tax at the basic rate — 20% in England, Wales and Northern Ireland — and adds it to your pot, which is why £4,000 of your money becomes £5,000 in the pension. For a basic rate taxpayer that is the whole story and the system works perfectly. It is also the only one of the three routes that gives a non-taxpayer anything at all: below the Personal Allowance there is no tax to relieve, so relief at source hands you money the other schemes cannot.
For anyone paying above the basic rate it is only the first instalment. The rest of your relief is given by widening your basic rate band by the gross contribution, so more of your income is taxed at 20% instead of the rate above it. That adjustment does not happen on its own. HMRC does not know what you paid into a personal pension unless you tell them, and nothing on your payslip will ever show the shortfall. You claim it through Self Assessment, or — if you do not file a return — by contacting HMRC with the figure, which normally comes back as a change to your tax code or a repayment.
At £65,000 a year that unclaimed relief is the difference between £4,000 and £3,000 for the same £5,000 in your pension. Higher up it is worse: at £110,000, where every pound of contribution also restores withdrawn Personal Allowance, the automatic 20% is a minority of what you are owed. Relief can be backdated, so if you have been contributing for years and have never mentioned it, that is a conversation with HMRC worth having.
Net pay arrangements and salary sacrifice do not have this problem. Both take the contribution out before income tax is worked out, so relief arrives at your full marginal rate in the pay packet, every month, with nothing to claim. The old flaw in net pay — low earners below the Personal Allowance getting no relief at all, where relief at source would have given them the basic rate top-up anyway — is now dealt with by an HMRC top-up paid after the end of the tax year.
Why salary sacrifice usually wins, and when it does not
Sacrificed pay is never yours. You agree a lower salary and your employer pays the difference into your pension, so the money is not earnings for income tax, not earnings for National Insurance, and not earnings for student loan purposes. That last one is the part most calculators miss entirely, and it is worth more than the National Insurance saving to a lot of graduates.
The size of the advantage depends on where you sit. At £35,000 the National Insurance saved is worth real money: £5,000 into the pension costs £3,600 by sacrifice against £4,000 by net pay. Higher up, above the point where employee National Insurance drops to its upper rate, the gap narrows to a couple of pence in the pound — unless you are repaying a student loan, in which case it widens sharply again. Tick a plan in the calculator above and watch the student loan row.
Your employer saves National Insurance too, at a higher rate than you do, and better schemes pass some or all of that saving into your pension as well. It is the reason sacrifice schemes exist and it is worth asking whether yours shares the saving. There is more on how the mechanism works in the salary sacrifice guide.
The catches are real but manageable. Sacrifice cannot take your pay below the National Minimum Wage, which rules it out for some workers entirely. It reduces the salary figure that mortgage lenders, life cover, redundancy terms and maternity pay are calculated from, unless your employer explicitly uses a notional pre-sacrifice figure. And it is a contractual change rather than a payroll switch, so it cannot be unwound retrospectively when your circumstances change mid-year.
Relief comes at your marginal rate, not the headline rate
People talk about “40% relief” as if it were a property of the pension. It is not. Relief is worth whatever rate the pound would otherwise have been taxed at, and that rate is often not one that appears in any published table. Between £100,000 and £125,140 the Personal Allowance is withdrawn as income rises, so a contribution buys back allowance as well as cutting tax: at £110,000, £5,000 into the pension costs only £1,900 of take-home. That is the highest rate of relief available anywhere in the UK system, and it is explained in full on the 60% tax trap page.
The same logic runs through the High Income Child Benefit Charge: a contribution that pulls your adjusted net income back below the threshold cancels the charge, so the relief is worth your marginal rate plus the whole of the clawback. Enter the number of children you claim for and the child benefit row above will show it.
Region matters as well. Scotland has more bands and higher rates in the middle, so relief is worth more there for the same salary — the £5,000 that costs £2,900 in England costs £2,800 in Scotland. Switch the region selector and the whole table re-computes against the Scottish bands. If you want the full deduction picture rather than just the pension question, the take-home pay calculator runs the same engine with tax codes, bonuses and benefits in kind.
The annual allowance, and the taper everyone gets wrong
Relief is only available on contributions up to your annual allowance, and only up to your total earnings for the year. Go over and the excess is added back to your taxable income, which cancels the relief you just claimed.
| Annual allowance test | Salary sacrifice | Net pay arrangement | Relief at source |
|---|---|---|---|
| Threshold incomeTest one. Sacrificed pay is added back; net pay and relief at source contributions are taken off | — | — | — |
| Adjusted incomeTest two. Your income with every pension contribution — yours and your employer’s — added back in | — | — | — |
| Your annual allowance | — | — | — |
| Your total pension input this year | — | — | — |
| Headroom leftNegative is not the same as a charge — carry forward comes next | — | — | — |
| Unused allowance carried forwardDrawn earliest year first, which is both what HMRC requires and the order that wastes least | — | — | — |
| Excess after carry forward | — | — | — |
| The annual allowance charge | — | — | — |
The standard annual allowance is £60,000, counting everything paid in for you: your contributions, the tax relief added to them, and your employer's. High earners get less, and the way that reduction is worked out is where calculators fall over. The taper has two conditions and both must be met before anything happens. If your threshold income is at or below £200,000, you keep the full allowance no matter how large your adjusted income is. Only when threshold income is over that line does the second test apply: the allowance falls by £1 for every £2 of adjusted income above £260,000, with a floor of £10,000.
Two people with an adjusted income of £280,000 can therefore have completely different allowances. One with threshold income of £180,000 — a modest salary and a very large employer contribution — keeps £60,000. One with threshold income of £220,000 is left with £50,000. A calculator that tests only adjusted income tells the first person they have been tapered, and they contribute less than they could have for the rest of the year on the strength of it.
The two incomes are defined differently on purpose. Threshold income is broadly your net income with relief-at-source and net pay contributions taken off, but with any salary sacrificed under an arrangement made on or after 9 July 2015 added straight back in. Adjusted income is your income with every pension contribution added back, yours and your employer's, so it measures total pension input rather than take-home capacity. Notice what that does in the table above: adjusted income is identical whichever scheme you use, but salary sacrifice gives you a higher threshold income than the other two, because the sacrifice is added back. Sacrifice can therefore trip the first test where a net pay arrangement of the same size would not.
Unused allowance from the previous 3 tax years can be carried forward if you were a member of a registered pension scheme in those years, which is what saves most people who have a single unusual year — and it is now in the table above, so a negative headroom no longer has to be read as a charge. Enter what was left over in each year and the calculator draws it down earliest year first, which is the order HMRC requires and the order that wastes least: the earliest year is the one about to fall out of reach. A year you were not a scheme member in contributes nothing, so leave it at zero.
If you have already taken taxable money flexibly out of a defined contribution pension, a money purchase annual allowance of £10,000 replaces the standard one — and unused money purchase allowance can never be carried forward, so the cushion disappears at the same time as the allowance shrinks. That is why the checkbox turns carry forward off rather than leaving it available at a smaller number.
A change to expect, not to apply yet
The National Insurance exemption on salary-sacrificed pension contributions is not permanent. The National Insurance Contributions (Employer Pensions Contributions) Act 2026 caps it — but the Act delays its own effect, and the delay is the whole point for anyone reading this today.
National Insurance Contributions (Employer Pensions Contributions) Act 2026, s.1(3) and s.2(3): the amendments made by this section have effect for the tax year 2029-30 and subsequent tax yearslegislation.gov.uk
So for 2026-27 there is no cap. This site models the exemption as uncapped because that is what the law provides for this tax year, and applying the cap early would understate take-home pay for every salary sacrifice user. We are also not printing the capped amount here: a figure only ships on TaxCliff once it sits in the data layer for the tax year it applies to, with the source it was read from, and 2029-30 is not built yet.
What we can show you is the size of the thing being capped. On the numbers you entered above, sacrificing keeps — out of your own National Insurance and — out of your employer's. The employer's saving is the larger of the two, and it is the one that pays for the scheme, so it is worth watching what your employer does with sacrifice arrangements as 2029 approaches. Nothing about this affects the income tax relief, which is untouched by the Act.
What a contribution costs at different salaries
The cost to your take-home of getting £1,000 into your pension, in England, Wales and Northern Ireland, with no student loan and no Child Benefit claim. Generated from this site's engine for 2026-27.
| Salary | Salary sacrifice | Net pay | Relief at source, claimed | Sacrifice relief |
|---|---|---|---|---|
| £25,000 | £720 | £800 | £800 | 28.0% |
| £35,000 | £720 | £800 | £800 | 28.0% |
| £50,000 | £720 | £800 | £800 | 28.0% |
| £60,000 | £580 | £600 | £600 | 42.0% |
| £75,000 | £580 | £600 | £600 | 42.0% |
| £105,000 | £380 | £400 | £400 | 62.0% |
| £120,000 | £380 | £400 | £400 | 62.0% |
| £140,000 | £530 | £550 | £550 | 47.0% |
The relief-at-source column assumes you claim everything you are entitled to. If you do not, the cost is flat at £800 on every row.
What to actually do with this
- Find out which scheme you are in. Payroll will tell you in one sentence, and it changes every number on this page.
- If it is relief at source and you pay above the basic rate, work out what you have contributed and claim the rest of your relief. It is not automatic and it is not small.
- If salary sacrifice is offered and your pay is comfortably above the National Minimum Wage, it is almost always the cheapest route to the same pension pot — and more so with a student loan.
- Check both annual allowance tests before assuming you are tapered, especially if your employer contributes generously on a modest salary.
- If your income sits in the allowance-withdrawal band or above the child benefit threshold, model the contribution that brings you back under. The relief there is worth far more than the headline rate.
Where these figures come from
Every rate used above is read from a published source and stored with the sentence it was read in. Full detail on the methodology page.
- pension.annualAllowance“Annual allowance: £60,000”Source, verified 2026-08-08
- pension.reliefAtSourceBasicRate“Your pension provider will claim tax relief for you at a rate of 20%”Source, verified 2026-08-08
- pension.taperThresholdIncome“Threshold income limit: £200,000”Source, verified 2026-08-08
- pension.taperAdjustedIncome“For every £2 your adjusted income goes over £260,000, your annual allowance for the current tax year reduces by £1”Source, verified 2026-08-08
- pension.minimumTaperedAllowance“The minimum tapered annual allowance is £10,000”Source, verified 2026-08-08
- pension.moneyPurchaseAnnualAllowance“Money purchase annual allowance: £10,000”Source, verified 2026-08-08
- pension.salarySacrificeNiReliefCap“National Insurance Contributions (Employer Pensions Contributions) Act 2026, s.1(3) and s.2(3): the amendments made by this section have effect for the tax year 2029-30 and subsequent tax years”Source, verified 2026-08-08
This is an information tool, not advice. Contributions are shown on an annual basis for the 2026-27 tax year and assume the contribution is within your relevant UK earnings.
What this does not do
- Tell you whether salary sacrifice is on offer. It is an arrangement your employer chooses to run, not something you can elect into, and the comparison above assumes all three routes are available to you.
- Model what sacrifice does to everything else. Reduced pay is the figure a mortgage lender, a redundancy calculation and some statutory payments read, and a contract that keeps a notional salary for those purposes is common but not universal.
- Check the money is allowed in against the scheme's own rules. The annual allowance, its taper, carry forward from the previous three years and the money purchase allowance are all modelled above; the lifetime limit on tax-free cash at the far end is not, and neither is whether your scheme will accept a contribution that size.
- Advise on where the money goes once it is in. Which fund, what it charges and whether the pot is invested sensibly matter far more over thirty years than the difference between these three routes, and none of it is a tax question.
Pension relief questions worth the answer
- How much tax relief do I get on a pension contribution?
- Relief comes at your marginal rate, not at a headline rate — which for anyone inside the allowance taper is far more than 40%. How you get it depends on the scheme: salary sacrifice and net pay give it immediately, relief at source gives you the basic rate automatically and leaves the rest to be claimed.
- Why do I have to claim higher rate pension relief myself?
- Because a relief-at-source scheme only ever adds the basic rate. Your provider claims that from HMRC and nothing else happens, so a higher rate taxpayer is owed the difference and has to ask for it, through a return or by contacting HMRC. It is the single most commonly unclaimed relief in the system, and it is worth years in arrears.
- Is salary sacrifice better than a normal pension contribution?
- Almost always, because it is the only method that also saves National Insurance, and it reduces the pay a student loan repayment is calculated on. What it costs you is contractual salary, which matters for borrowing and for some pay-linked benefits. The comparison above uses your own figures rather than a rule of thumb.
- Can I pay in more than I earn?
- Not with relief. Contributions attract relief up to 100% of your relevant earnings, capped by the annual allowance of £60,000. Anyone with no earnings can still pay in a small amount and get basic rate relief, and unused allowance from the previous three years can be carried forward — which is the exception that makes a large one-off contribution possible.