Pension tax relief for higher and additional-rate taxpayers
Higher and additional-rate taxpayers get the most from pension contributions, but they also face the most rules: relief that has to be claimed, an allowance that tapers away at high incomes and charges when the limits are exceeded.
By Vince De Stefano, Head of Financial Services
Updated 26 October 2026
4 min read
Key takeaways
- Relief at source pensions add basic-rate relief automatically. Higher and additional-rate relief is claimed through your tax return.
- The annual allowance is £60,000. Above £260,000 of adjusted income it tapers, reaching £10,000 at £360,000.
- Unused allowance from the previous three tax years can be carried forward.
- For income between £100,000 and £125,140, pension contributions can restore the personal allowance, giving effective relief of 60%.
How relief is given
There are three ways relief reaches you, depending on how you contribute:
- Relief at source. Used by personal pensions, SIPPs and many workplace schemes. You pay 80% and the provider claims the other 20% from HMRC. Higher-rate taxpayers claim a further 20% of the gross contribution through self assessment, and additional-rate taxpayers a further 25%, on the part matched by income taxed at those rates. Taxpayers in Scotland have different rates. Many people never claim it.
- Net pay. The employer deducts contributions before tax, so full relief is given through payroll.
- Salary sacrifice. You give up salary and your employer pays the same amount into the pension. This saves income tax and employee National Insurance, and the employer saves National Insurance too. From 6 April 2029, only the first £2,000 a year of salary-sacrificed contributions will be free of National Insurance.
The annual allowance
Total contributions to your pensions in a tax year, including employer contributions, are limited by the annual allowance of £60,000. Your own contributions only receive relief up to 100% of your UK earnings for the year. Contributions above the allowance are taxed through the annual allowance charge at your marginal rate. If the charge is over £2,000, you can usually ask your pension scheme to pay it from your fund.
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The tapered annual allowance
The allowance is reduced if both of these apply:
- threshold income, broadly your income less your own pension contributions, is over £200,000; and
- adjusted income, broadly your income plus all pension contributions including your employer's, is over £260,000.
The allowance falls by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000 at £360,000. Bonuses, share awards and one-off gains on investments can push income over the thresholds unexpectedly, so the calculation is best done before the end of the tax year.
Carry forward
If you did not use your full annual allowance in any of the previous three tax years, and you were a member of a registered pension scheme in those years, you can carry the unused amount forward. You must use the current year's allowance first. Carry forward is often used in a year with a large bonus or other one-off income, but your own contributions still cannot exceed your earnings for the year.
Income between £100,000 and £125,140
The personal allowance of £12,570 is reduced by £1 for every £2 of adjusted net income over £100,000. In this band the effective rate of income tax is 60%. A pension contribution reduces adjusted net income, so a contribution that brings income back to £100,000 restores the personal allowance and gives relief at 60%. The same reduction can also remove the High Income Child Benefit Charge for income between £60,000 and £80,000, and can restore eligibility for tax-free childcare.
Most of these calculations depend on income for the whole tax year. We review earnings, bonuses and investment income with you in the early spring, so contributions are made before the year closes and the relief is claimed on your return.
Frequently asked questions
How do I claim higher-rate tax relief on pension contributions?
If your pension uses relief at source, claim it through your self assessment return. If you do not file a return, you can ask HMRC to adjust your tax code.
What is the pension annual allowance for 2026/27?
£60,000, or less if the tapered annual allowance applies. Your own contributions only get relief up to your UK earnings for the year.
What is the tapered annual allowance?
If your adjusted income is over £260,000 and your threshold income is over £200,000, the allowance falls by £1 for every £2 above £260,000, to a minimum of £10,000.
Can a pension contribution get my personal allowance back?
Yes. Contributions reduce adjusted net income, so they can restore the personal allowance lost on income between £100,000 and £125,140.
Sources & further reading
The value of investments and the income from them can fall as well as rise, and you may get back less than you invest. Tax treatment depends on your circumstances and may change.
This article is general information, not advice. Tax, financial and legal rules change and their effect depends on your circumstances. Check the current position and take professional advice before acting. Last reviewed 26 October 2026. Totus One Limited (company no. 16855798).
An independent financial planner advising individuals and families on pensions, investments, protection and inheritance.
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