A £1,000 gross pension contribution costs a basic-rate taxpayer just £800, a higher-rate taxpayer £600 and an additional-rate taxpayer £550. The provider adds 20% automatically; higher earners claim the rest. Enter your contribution and income below to see your real net cost.
Contribution + income → net cost
Most personal and workplace pensions use the relief at source method. You pay your contribution from money that has already been taxed, and your pension provider then claims back the 20% basic-rate relief from HMRC and adds it to your pot automatically. So to get £1,000 into your pension you only hand over £800 — the provider tops it up with the missing £200.
If you pay tax at the higher (40%) or additional (45%) rate, the 20% added at source isn't the full relief you're entitled to. You claim the extra 20% or 25% through your Self Assessment tax return, usually as a reduction in your tax bill or a rebate. That's why the real net cost of the same £1,000 contribution falls to £600 for a higher-rate taxpayer and £550 for an additional-rate taxpayer.
Net cost of getting different amounts into your pension, by tax band, for 2026/27:
| Gross into pension | Basic rate | Higher rate | Additional rate |
|---|---|---|---|
| £1,000 | £800 | £600 | £550 |
| £2,500 | £2,000 | £1,500 | £1,375 |
| £5,000 | £4,000 | £3,000 | £2,750 |
| £10,000 | £8,000 | £6,000 | £5,500 |
Tax relief isn't unlimited. The key 2026/27 rules are:
Source: GOV.UK — pension tax relief.
A £1,000 gross contribution costs a basic-rate taxpayer £800, because the provider adds £200 of 20% relief automatically. A higher-rate taxpayer's net cost is £600 and an additional-rate taxpayer's is £550, once the extra relief claimed through Self Assessment is counted.
You get 20% at source automatically. Higher-rate (40%) and additional-rate (45%) taxpayers claim the extra 20% or 25% through their Self Assessment tax return, or by contacting HMRC — it is not added to your pension at source.
The standard annual allowance is £60,000 for most people, covering your and your employer's contributions. It can be tapered for very high earners and drops to £10,000 once you have flexibly accessed a pension.
Salary sacrifice achieves the relief differently — the money never counts as salary, so it escapes tax and National Insurance up front. For many employees it's even more efficient; compare it with our salary sacrifice calculator. See GOV.UK for the rules.
