One of the two ways you can get tax relief on the money you add to your pension pot.
Net pay arrangement means your contributions are taken from your pay before your wages are taxed. So, you only pay tax on what’s left – therefore you get your full tax relief straightaway. We also call this method the ‘gross tax basis’ as your contributions are taken from your gross pay.
- This method means anyone who doesn’t pay tax won’t get tax relief.
- The alternative is relief at source.