What is the maximum employer’s contribution?

In theory, an employer can pay any amount of pension contribution to a registered pension scheme for their employees, regardless of their salary. The problem is that tax relief isn’t automatic and it’s up to the employer’s local inspector of taxes whether or not the employer receives tax relief on the whole contribution. Contributions must satisfy what is known as the ‘wholly and exclusively’ requirements to receive tax relief.   So it’s not always possible to find out in advance whether an employer contribution would receive tax relief or not.

This is a complex subject and more details can be found on www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm043000.

Please note that employer contributions count towards the employee’s annual allowance.

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