Tax relief
Every payment you make into a pension plan that is within the annual allowance limit (£235,000 for tax year 2008/2009 - see Stakeholder - 'How much should I save?') is entitled to tax relief - normally at your highest rate. For basic-rate taxpayers and for those who do not pay tax, the tax relief is automatically added to your payments.Example of tax relief for basic-rate taxpayers and those who do not pay tax:
For higher-rate taxpayers, basic rate tax relief is automatically added to your payments. You can then claim an additional 20% tax relief through your annual tax return.
Example of tax relief for higher-rate taxpayers:
Note:
- Tax and legislation are likely to change in the future. The information given here is based on our understanding of law and HM Revenue & Customs practice at the date of publication.
- Tax relief may alter and its value depends on your financial circumstances.
- The examples of tax relief shown above are based on a personal pension arrangement.
- Your pension in retirement will be taxed as earned income.
