Pension Tax Relief & Pot Projection

How UK pension tax relief works in 2026/27

Pension contributions benefit from tax relief — the government effectively tops up what you save. Basic-rate taxpayers get 20% relief: a £100 gross contribution costs you only £80. Higher-rate (40%) and additional-rate (45%) taxpayers can claim further relief via Self Assessment, reducing the net cost to £60 or £55 respectively. Scotland uses its own SRIT bands: the Intermediate, Higher, Advanced and Top rates are 21%, 42%, 45% and 48%, with corresponding extra relief claims available through the Scottish return.

The Annual Allowance caps how much can go into your pension each tax year with relief — currently £60,000 in 2026/27, including employer contributions. Very high earners may face a tapered allowance reducing to £10,000. The FCA COBS 13 growth rate scenarios used in the projection section (2%, 5%, 8%) are the rates prescribed by the regulator for all projection illustrations — they are not forecasts of actual returns.

Frequently asked questions

How much tax relief do I get on pension contributions in 2026/27?

Basic-rate taxpayers receive 20% tax relief — meaning a £100 gross contribution costs you £80. Higher-rate taxpayers (40%) pay £60 net for the same £100 gross contribution (20% from the provider under relief-at-source, then an additional 20% claimed via Self Assessment). Additional-rate taxpayers (45%) pay £55. Scotland taxpayers at the Intermediate (21%), Higher (42%), Advanced (45%) or Top (48%) rate can claim additional relief via their Scottish tax return.

What is the annual allowance for pension contributions in 2026/27?

The standard Annual Allowance is £60,000 for 2026/27 — covering all contributions (yours and your employer's) across all pension arrangements. High earners with threshold income above £200,000 AND adjusted income above £260,000 are subject to a tapered allowance, reducing by £1 for every £2 of excess adjusted income, to a minimum of £10,000. The Money Purchase Annual Allowance (MPAA) is £10,000 and applies if you have accessed flexible drawdown.

What is the difference between relief-at-source and salary sacrifice?

Under relief-at-source (RAS), you contribute from your net (after-tax) pay and the pension provider automatically claims 20% basic-rate relief from HMRC, grossing up your contribution. Higher and additional-rate taxpayers must claim any extra relief via Self Assessment. Under salary sacrifice, your employer reduces your gross salary before tax and NI — meaning you save both income tax AND National Insurance on the contribution. Salary sacrifice is generally the most tax-efficient method.

What are the FCA growth rates used in the pension pot projection?

This calculator uses the FCA COBS 13 Annex 2 prescribed growth rates: 2% per annum (low/cautious scenario), 5% per annum (mid/moderate, the default), and 8% per annum (high/adventurous). An inflation rate of 2% can be applied to show projections in today's purchasing power. These rates are illustrative — actual returns are not guaranteed.

When can I access my pension pot?

The minimum pension access age is currently 55, rising to 57 in April 2028 (for most schemes). You can take 25% of your pension pot as a tax-free lump sum (the PCLS), up to a maximum of £268,275 — the Lump Sum Allowance for 2026/27. Withdrawals above the tax-free amount are subject to income tax at your marginal rate.