Millions left unclaimed in pension tax relief – is some of it yours?

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Are you missing out on a hidden pension payback? 

Pension tax relief has been called the ‘hidden hero’ of pensions, helping to boost your savings and incentivising you to put more towards your future. But millions of pounds in pension tax relief go unclaimed every year. Could some of this money be yours – and how do you go about getting it?

 

What is pension tax relief?

Usually, you can get tax relief on your pension contributions. It’s essentially the government topping up the money you contribute to your plan by returning the income tax you’ve already paid on that amount.

Your pension provider claims basic rate relief (20%) and adds it into your plan. This means you effectively get a 20% top-up on your payments into your plan.

For example, every £100 paid into your pension plan would only cost you £80.

And if you’re someone who pays a higher-rate of tax (40%), that £100 payment would cost you £60. But only 20% tax relief is added automatically. So you would need to claim back the extra 20% yourself. And additional-rate taxpayers need to claim back an extra 25%. When you claim it back, that extra goes into your pocket, although you could then consider putting it into your pension plan.

Income tax bands and rates can be different depending on where you live in the UK. They’re different in Scotland.

 

Why is so much tax relief unclaimed?

Many higher and additional-rate taxpayers aren’t claiming that extra 20% or 25% tax relief on top of the 20% that’s added automatically. It’s estimated that higher-rate taxpayers could be missing out on additional pension wealth worth £97,000 by not claiming back and not reinvesting that extra tax relief into their plans.

A lot of people don’t realise they have to claim, especially if they’re not already doing their own tax self-assessment claim. Or they simply don’t know how to claim.

 

Who needs to claim tax back?

If you’re in a ‘net pay’ pension arrangement, which is common in a lot of workplace pension schemes, you pay into your plan before you’ve been taxed. You get tax benefits in a slightly different way to what we’ve described, and you don’t need to claim any tax relief back.

With ‘relief at source’ arrangements, you pay into your plan after you’ve been taxed. If you’re in a relief at source arrangement, and you also pay more than the basic rate of tax, then you do need to claim the extra relief.  

If you’re a basic-rate taxpayer, you don’t need to do anything.

If you’re not sure which type of scheme you’re in, it’s a good idea to check your payslip where you can see how your pension contribution is shown. If it’s listed as a deduction from your pay before income tax is worked out, for example, you’re likely in a net pay arrangement. 

Alternatively, you can check with your employer or pension provider.

 

How can you claim back tax relief?

There are a few ways to claim tax relief back:

• Self-assessment tax return. If you complete a self-assessment tax return, you can include the extra pension tax relief on it.
• Contact HMRC. If you don’t do a self-assessment tax return, you can contact HMRC directly and they can help.
• Claim tax relief on GOV.UK.

Claiming tax relief back is an important step to take to make sure you don’t miss out on money you’re entitled to.

 

Can you claim tax relief for previous years?

Yes, you can claim back any tax relief for the last four tax years. If you need to check on the rules and time limits that apply, you can find out more on GOV.UK.

 

How much tax relief can you get?

In most cases, you can get pension tax relief on contributions up to £60,000 in a tax year. This is known as the annual allowance.

However, there are some important things to be aware of:

• You can only get tax relief on contributions up to £60,000 or your total relevant UK earnings for the tax year* – whichever is lower.  So if you earn £30,000, you could pay in up to £30,000 and still get tax relief.
• You must be under the age of 75 to receive tax relief on pension contributions.
• If you earn under £3,600, you can get tax relief on pension contributions you make up to £2,880 each tax year.

*Your relevant UK earnings usually include things like salary, self-employed income, some types of benefits and more.

If the total amount paid in across your plans (by you, your employer, third parties, etc) in a tax year exceeds your annual allowance, you could face a tax charge.

 

What are the next steps?

It could be a good idea to review your pension payments now. This can help you see how much tax relief you’ve been given and could give you an idea of much you might be due.

If you’re a Standard Life customer, you can review your payments easily online. You can find out more about our online services on our website. Or visit our support page for FAQs and ways to get in touch.

 

The information here is based on our understanding March 2026 and shouldn’t be taken as financial advice.

A pension is a long-term investment that you cannot normally access until age 55 (rising to 57 from 6 April 2028). Its value can go down as well as up and could be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.