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Pensions and tax

Pension tax relief – eligibility

Tax relief can only be claimed for the tax year the contribution is actually made. How much you save towards a pension is usually tax-free, up to certain limits, see below for a detailsed breakdown. 

  • You cannot get tax relief on contributions that are more than 100% of your earnings in a tax year, and
  • regardless of your earnings, you may pay tax on contributions over £40,000 gross in a year, unless you have any unused annual allowance in the previous three tax years.
  • If you have previously taken benefits from a defined contribution pension scheme, tax would be payable on your contributions to a defined contribution scheme which are over 100% of your earnings or the Money Purchase Annual Allowance (MPAA) £4,000 per annum* gross whichever is lower. If you are contributing towards a defined benefit scheme, the limit is still 100% of your earnings or £40,000, whichever is lower.

You also cannot get tax relief if your pension provider isn’t registered with HM Revenue and Customs

If you don’t have earnings, you can still get tax relief on your contributions up to £2,880 net.

If you are 75 or older you can technically contribute towards a pension scheme, but your contributions will not qualify for tax relief.

There are different rules that apply if you are not currently UK resident or paying into a qualifying overseas pension.

To read more about pensions and tax, please read our dedicated pages or contact our team direct. 

*The reduction in the Money Purchase Annual Allowance is currently on hold as it was not included within the Finance Bill 2017. It may be re-introduced at a later date and it may apply retrospectively from 6 April 2017 (subject to Parliamentary approval).

Frequently asked...

Where can I find out more?

If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.

  • This page explains about how and when tax relief applies 
  • You can read more about tax and pensions here
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