Net pay vs relief at source
Net pay schemes deduct your contribution before tax, so relief is automatic. Relief at source schemes take the contribution after tax, and the pension provider adds 20% from HMRC. If you pay higher or additional rate tax, you must claim the extra 20% or 25% yourself, through Self Assessment or by contacting HMRC.
Low earners below the Personal Allowance get the 20% top-up in relief at source schemes but nothing in net pay schemes, which HMRC now partly compensates for.
Example: higher-rate claim
Alex earns £70,000 and pays £4,000 into a relief-at-source personal pension. The provider adds £1,000, making £5,000. Alex can claim a further £1,000 back from HMRC, so the real cost is £3,000 for £5,000 of pension.
Limits
Relief is capped at 100% of your UK earnings and the £60,000 annual allowance. Unused allowance from the previous three years can be carried forward.
Compare the same contribution
Keep the gross pension amount consistent when comparing methods. Comparing a net payment in one scheme with a gross contribution in another can make the apparent saving misleading.
Try it with your own numbers
See how pension contributions affect take-home pay and how much tax relief you get in 2026/27.
Frequently asked questions
Do Scottish taxpayers get relief at 21%?
Relief at source adds 20%; intermediate and higher-rate Scottish taxpayers claim the difference from HMRC.
Check it on GOV.UK: Scottish Income Tax (opens GOV.UK in a new tab)
Sources
Tax year 2026/27. Check these official sources for current rules and deadlines.
Related calculators
- Pension Tax Calculator — See how pension contributions affect take-home pay and how much tax relief you get in 2026/27.
Related guides
- Salary Sacrifice Explained — How salary sacrifice works for pensions, electric cars and cycle schemes, how much tax and NI you save, and the downsides to check.
- The Personal Allowance Explained — How the £12,570 Personal Allowance works, who loses it, the £100,000 taper and the 60% trap, plus ways to protect it.
- Self Assessment Explained — Who needs to file a Self Assessment tax return, what goes on it, the deadlines for 2026/27 and the penalties for missing them.