Every time you pay into your pension, the government will let you hold on to some of the tax you would’ve paid – called tax relief.

You can receive tax relief in two ways: (depending on whether your contributions are made before or after tax):

If your employer takes your contributions before tax

This is known as a net pay arrangement, you’ll get your full tax relief straightaway at your usual rate of tax.

This is how it works for you:

• Your employer takes your contributions from your gross salary – before they’ve taken away tax.
• Because you only pay tax on what’s left, you’ll get your full tax relief straightaway. So for contributions made through your employer, you won’t need to contact HM Revenue & Customs (HMRC) to claim extra tax relief (if you’re a higher or additional rate tax payer).

As your contribution has already benefitted from tax relief when it’s deducted, you won’t see this as a separate transaction on your Online Account.

If you don’t normally pay tax, (because you’ll earn less than £12,570 in the current tax year), you won’t receive any tax relief on contributions you make through your employer.

If your employer takes your contributions after tax, or you make contributions directly to us

This is known as relief at source.

This is how it works for you:

• Your employer takes your contributions from your net salary − after they’ve taken away tax.
• Next, we ask HM Revenue & Customs (HMRC) to apply tax relief at the basic rate of 20% on your contributions. We add it to your pension pot when we receive it – it can take up to 12 weeks for them to send this to us.

You’ll see this listed separately in your Online Account transactions.

To do this, we must have a valid National Insurance number for you.

And if you’re a higher or additional rate taxpayer, you can also claim more tax relief from HMRC through your self-assessment tax returns or by contacting them.

If you don’t pay tax as your earnings are below the annual income tax personal allowance, you’ll still receive tax relief at the basic tax rate of 20% on contributions up to 100% of your earnings or the first £2,880 you pay into a pension pot each tax year if you have earnings less than this amount.

More…

Read more about how your contributions show on your Online Account