Finance Matters Insights
HMRC Pension Tax Relief: You May Be Owed A Refund
If you are a high earner, above the £50,270 threshold, you may be entitled to additional pension tax relief from HMRC - the taxman owing you money? love to see it.
I posted a reel on this last week and it sparked a lot of surprise and questions. So, here's a full breakdown of what you need to know and exactly what you need to do if it applies to you.
Who does this actually apply to?
- Higher-rate taxpayers (40%)
- Additional-rate taxpayers (45%)
- Anyone whose income has crossed into higher tax bands during the year
The key factor is how your pension contributions are set up, not just how much you earn. There are three main pension contribution types:
- Relief at source schemes (MOST common for personal pensions and workplace pensions): You pay contributions from your take-home pay, and your provider automatically adds 20% basic-rate tax relief. If you’re a higher-rate taxpayer, you may need to claim the extra relief yourself.
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Net pay arrangement (some workplace pensions)
Your contributions are taken before tax, so you usually receive full tax relief automatically via payroll. In this case, you often do NOT need to claim additional relief. -
Salary sacrifice schemes
Your employer reduces your salary and pays the contribution instead. Tax relief is typically automatic through reduced taxable income.
If you’re unsure which you have, check your pension statements or ask HR/payroll.
Worth noting, if you contribute to a SIPP via your Ltd Company this will NOT apply to you.
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How pension tax relief works:
The government gives tax relief to encourage retirement saving.
- Basic-rate taxpayers receive 20% relief.
- Higher-rate taxpayers should receive 40% total relief.
- Additional-rate taxpayers should receive 45% total relief.
🗒️ Example:
If you contribute £80 into a relief-at-source pension:
- The provider adds £20 basic-rate relief.
- Your total contribution becomes £100.
But if you pay higher-rate tax, you are entitled to another £20 in relief, (£25 if you're an additional rate taxpayer). HMRC does not always add this automatically. This is what you will need to claim back.
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What to do:
If your pension uses relief at source, here’s what to do:
-
Check your contributions
Look at your annual pension statement or contribution summary. -
Confirm your tax band
Check whether your income puts you in higher or additional rate. - Claim via HMRC
You can claim through:
- Self Assessment tax return (if you already file one)
- Write to HMRC in the post with relevant information
- Contacting HMRC directly and requesting a tax code adjustment
You’ll typically need:
- Total gross pension contributions for the tax year
- Your pension provider details
Once processed, HMRC may issue a refund directly to your bank account or adjust your future tax - you are able to specify your preference.
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If you’re a higher earner contributing to a pension, it’s worth checking whether you’ve claimed everything you’re entitled to. This is one of those small admin tasks that can quietly return real money.
As always, this is general information and not personalised financial advice. If you’re unsure, speak to a qualified professional or check directly with HMRC.
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📨 This newsletter was originally sent to my mailing list on 23 Feb 2026. To receive these directly in your inbox, subscribe here.
F
Fisayo Martins
Founder at Finance Matters UK
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