Everything About HMRC Pension Tax Relief Changes

Published by Nida Umair posted in Pension on 15 January 2026

Many UK workers are missing out on changes to pension tax relief worth hundreds of millions of pounds every year. Research shows that higher‑rate and additional‑rate taxpayers left around £1.3 billion of pension tax relief unclaimed between 2016/17 and 2020/21. With the government pushing more tax administration online and a new HMRC service launching in 2025/26, now is the perfect time to review your pension contributions and ensure you aren’t leaving free money on the table.

What Is HMRC Pension Tax Relief?

Pension tax relief is the government’s way of topping up your retirement savings. When you pay money into a registered pension, you can reclaim the income tax paid on that contribution up to the annual allowance (usually £60,000 in 2025/26).

For basic-rate taxpayers, your pension provider automatically claims 20% tax relief – you pay £80, and £20 is added so that £100 goes into your pot. If you do not pay any tax, you can still receive 20% relief on contributions up to £2,880 a year.

However, higher and additional‑rate taxpayers (40% and 45%) are entitled to further tax relief. A £100 contribution costs as little as £60 if you pay 40% tax and £55 if you pay 45%. Only the first 20% is added automatically – you must claim the extra yourself.

Pension Tax Relief Breakdown

Taxpayer Type	Contribution (£)	Tax Relief (%)	Tax Relief Claimed Automatically	Extra Relief You Must Claim	Total Cost to You (£)
Basic-rate Taxpayer (20%)	£100	20%	£20	£0	£80
Higher-rate Taxpayer (40%)	£100	40%	£20	£20	£60
Additional-rate Taxpayer (45%)	£100	45%	£20	£25	£55

Net pay vs. relief at source

Whether your pension contributions attract full relief automatically depends on how your scheme is set up:

Net Pay

Contributions are taken from your salary before tax, so you receive full tax relief at your highest rate without making a claim. This is common in many workplace schemes.

Relief at Source scheme

Contributions are taken from your pay after tax. Your provider claims 20% relief for you, but if you pay more than 20% income tax, you need to claim the extra yourself.

Salary sacrifice

You agree to a lower salary, and your employer pays contributions on your behalf. You get the relief through lower income tax and national insurance, so no additional claim is needed.

Why Are People Missing Out?

Many higher earners simply do not realise they must reclaim the additional relief. The tax treatment differs depending on the pension arrangement; many higher‑rate and additional‑rate savers never submit a claim. Hundreds of millions of pounds go unclaimed each year for those earning over £50,270. Common reasons include:

Lack of awareness – people assume their provider handles all tax relief.
Complex claim process – until recently, claiming meant completing a paper form or writing to HMRC.
Not filing Self Assessment – workers who are not self‑employed may not be registered for Self Assessment and therefore never claim.

HMRC’s New Online Service

HMRC’s Transformation Roadmap outlines plans to modernise tax administration. In 2025/26, HMRC will roll out a new online service for all PAYE taxpayers with enhanced features to check and update income, allowances, and relief.

There will also be a new expenses service allowing PAYE customers to submit claims and upload evidence in one place. A pilot has already started – the service is being tested with around 50% of the PAYE population and will expand to 35 million taxpayers during 2025/26.

The streamlined service replaces older manual claims. Eligible individuals can even backdate claims for up to four previous tax years, making it possible to recover significant sums.

Who Can Claim Extra Pension Tax Relief?

According to HMRC guidance, you may need to claim extra pension tax relief if:

You pay income tax above 20% (higher or additional rate).
Your pension uses relief at source, so only 20% relief is added automatically.
Your pension scheme is not set up for automatic tax relief (for example, some workplace schemes or certain overseas pensions).
Someone else pays into your pension (because contributions from others are treated as yours and might require a claim).

You are eligible to claim if you contribute to a personal pension (including self‑invested personal pensions) or a workplace pension where relief is not given automatically. HMRC states that intermediate‑rate or higher‑rate taxpayers and some basic‑rate taxpayers with ‘relief at source’ schemes can claim.

What Information Do You Need?

HMRC’s online claim tool asks for the following details:

National Insurance number.
Type of pension and name of your provider.
Net amount of contributions for each tax year you are claiming.
Payroll number or reference number.
Proof of contributions (for example, a statement from your provider or payslip).

How to Claim Pension Tax Relief

Via HMRC’s Online Service

Check you’re eligible – make sure you are paying more than the basic rate of income tax and your scheme uses relief at source.
Gather your details – NI number, provider name, contribution amounts and proof of payment.
Create or sign in to your Government Gateway account and access the pension tax relief claim service.
Enter your pension contributions (gross amount, including the 20% added by your provider).
Submit your claim – you can save your progress and return later. HMRC will review your claim and typically respond within 28 working days.

Via Self-Assessment

If you complete a self-assessment tax return, you must claim through the return for both current and previous tax years:

Go to the “Tax Reliefs” section of your return and enter the gross pension contributions (your payments plus the 20% basic relief).
HMRC will calculate the extra relief based on your tax band.

If your return is more than 12 months past the deadline, you can write to HMRC with a reclaim letter.

What Happens After You Claim Pension Tax Relief?

The additional tax relief can be paid to you in different ways:

Cash rebate direct to your bank account.
Reduction in your tax bill if you owe tax.
Change to your tax code, reducing the tax taken from future income.

How Extra Relief Works

Let’s consider Alex, who earns £60,000 and decides to contribute £6,000 to their pension. Through the relief at source scheme, Alex automatically receives £1,200 (20%) added to their contribution. Since their earnings exceed the higher-rate threshold by £9,730, they can claim an additional £1,946 in higher-rate relief. This brings the net cost of the £6,000 contribution down to £4,054.

If Alex’s income was £62,730 or higher, the full 40% relief would apply, reducing the cost of the £6,000 contribution to just £3,600.

Backdating Claims: Don’t Miss the Deadline

You can claim tax relief for up to four previous tax years, in addition to the current one. HMRC allows taxpayers to request a refund within four years of the end of the relevant tax year. For example, a claim for the 2024/25 tax year (ending 5 April 2025) must be submitted by 5 April 2029. During the 2025/26 tax year, you can backdate claims for the following years:

2022/23
2023/24
2024/25
2025/26

It’s important to make separate claims for each qualifying tax year. To avoid missing deadlines and receiving your refund sooner, it’s best to submit your claim as early as possible.

Annual Allowance and Carry Forward

The annual allowance sets a cap on the total contributions you (and your employer) can pay into pensions each tax year while still receiving tax relief. For 2025/26 the standard allowance is £60,000; high earners may have a tapered allowance between £10,000 and £59,999. If you’ve already taken flexible income from a defined contribution pension, the money purchase annual allowance (MPAA) reduces your allowance to £10,000.

If you do not use all of your allowance, you may be able to carry forward any unused allowances from the previous three tax years to make larger contributions. To use carry forward, you must:

Have used up your current year’s allowance.
Have been a member of a registered pension scheme in the years you’re carrying forward.
Not having triggered the MPAA.

Carry forward can be a powerful way to increase contributions (for example, after a large bonus or inheritance) while still benefiting from tax relief.

How We Can Help You Deal With Recent Pension Tax Relief Changes

Apex Accountants help clients make the most of pension tax relief and navigate HMRC’s evolving digital systems. Our specialist auto-enrolment and pension services include:

Pension tax relief checks – reviewing your contributions and tax bands to identify unclaimed relief and ensuring you maximise available allowances.
HMRC online claims – handling the online claim process or Self Assessment entries on your behalf, including backdated claims for up to four previous tax years.
Payroll and auto‑enrolment support – advising on net pay vs relief at source arrangements and helping employers set up tax‑efficient workplace pensions.
Personal tax planning – integrating pension contributions into broader tax strategies to manage annual allowance, tapered allowance and carry forward.
Business and company pensions – advising company directors on employer contributions, salary sacrifice and corporation tax deductions.

Our team stays up to date with the latest HMRC digital initiatives, so you can focus on your business while we ensure you claim every penny of relief you’re entitled to.

Conclusion

Pension tax relief is one of the most generous incentives the UK tax system offers, yet millions of pounds go unclaimed each year. Higher- and additional-rate taxpayers must take action to reclaim the extra relief due for contributions. The government’s new digital services make claiming easier than ever, and you can backdate claims for four previous tax years. Review your pension arrangements, check whether you are in a net pay or relief‑at‑source scheme, and gather the necessary information to submit a claim. Apex Accountants is here to guide you through the process, maximise your retirement savings and ensure you don’t leave money behind.

FAQs on Pension Tax Relief Changes

1. Why am I not receiving full pension tax relief?

If you pay the basic rate (20%) Income Tax and your pension uses a net pay arrangement, you already get full relief. However, if your pension uses relief at source, your provider only claims 20% for you. Higher and additional-rate taxpayers must claim the extra 20% or 25% themselves.

2. How do I know which arrangement my pension uses?

Ask your employer or pension provider. Net pay arrangements deduct contributions before tax and require no further action. Relief at source schemes deduct contributions after tax and automatically add 20% relief—you need to claim more if you pay a higher tax. Salary sacrifice means your employer pays the contributions, and you already benefit from tax and National Insurance savings.

3. Do I need to complete a Self Assessment tax return?

If you are already registered for Self Assessment, you must claim extra pension tax relief through your return. If you don’t normally file a return, you can use HMRC’s online service or contact HMRC to make a claim.

4. What documentation do I need?

You’ll need your National Insurance number, details of your pension provider and scheme, your net contributions for each tax year and evidence such as payslips or statements.

5. How long does it take to receive the relief?

Once you submit your claim, HMRC will review it and contact you within about 28 working days. You may receive a rebate, an adjustment to your tax code or a reduction in your tax bill.

6. How far back can I claim?

You can claim for the current tax year and up to four previous tax years. The deadline is four years after the end of each tax year. Missing the deadline means HMRC won’t process the claim.

7. What if my pension contribution exceeds my earnings?

Tax relief is limited to 100% of your relevant UK earnings. Contributions above that amount won’t receive relief and may incur an annual allowance charge.

8. Does salary sacrifice need a claim?

No. Under salary sacrifice, the employer makes the pension contribution, so you get income tax and National Insurance savings directly. There is no additional relief to claim.

9. Can I pay into someone else’s pension?

Yes, but contributions from others are treated as yours for tax relief purposes. The relief depends on your earnings rather than the person who paid in.