Six tips to boost your pension savings before end of tax year 2025/26

id

5 April is the last day of the current tax year – and there are things you can do to make the most of your pension plan’s tax benefits before then. Here are our top tips to help you give your pension savings a boost before the tax year is up.

1. Use your pension annual allowance

When you have a pension plan, you need to keep your pension ‘annual allowance’ in mind. This is the total that can be paid in across your pension plans in a tax year before you could face a tax charge.

The annual allowance is currently £60,000. That includes payments by you, your employer, and any third parties, plus any tax relief that’s been added to your plans.

Your allowance might be lower than this if you have ‘income’ above £200,000.

Your allowance might reduce to £10,000 if you’ve started taking money from a pension plan.

2. Top up your pension payments with tax relief

People under 75 can get ‘tax relief’ when they pay into a pension plan. This means their payments get topped up by the government. How much of a boost you get depends on the amount of income tax you pay.

For example, if you pay income tax at the basic rate of 20%, you can get a 20% top-up from the government on your payments into your pension plan. This means it’d cost you £80 to get £100 paid in. And it’d cost you less if you’re a higher or additional-rate taxpayer. 

Only 20% tax relief is added automatically. So if you’re a higher or an additional-rate taxpayer, you need to claim extra back from the government by contacting them or submitting a self-assessment tax return.

Some workplace pension schemes – for example, salary sacrifice or salary exchange schemes – offer tax benefits in a different way. Check with your employer how this works for you if you’re not sure. Salary sacrifice is set to change form 2029 – read our article for more.

You can personally pay in up to 100% of your earnings or £60,000 in a tax year – whichever’s lower – and still get tax relief. But you need to be careful that the total amount paid in overall doesn’t exceed £60,000.

3. Ask about your workplace pension plan

Got a pension plan through your job? Your employer usually pays in too. At least 8% of your ‘qualifying earnings’ usually needs to be paid in. A minimum of 3% usually comes from your employer, while a 5% minimum usually comes from you.

Some employers will pay in more than the minimum or match the percentage you’re paying into your plan up to a particular amount. So it’s worth checking with them to see what’s possible.

4. Consider bonus sacrifice

If you get a work bonus, you might have the option to put some or all of it into your pension plan. Doing this could save on tax and National Insurance deductions, meaning you could potentially keep more of your bonus in the long run. You could check if your employer offers this.

5. Get your tax-free personal allowance back

You usually have a ‘personal allowance’, which is the amount of income you don’t have to pay tax on. For most people, it’s £12,570. So if your income is £30,000, you normally won’t need to pay tax on £12,570 of that.

When your ‘adjusted net income’ is more than £100,000, your personal allowance is reduced by £1 for every £2 above this amount. You lose the personal allowance once your income is £125,140 or more.

You might be able to recover some or all of your personal allowance by paying into your pension plan (depending on how much you pay in), as this can reduce your adjusted net income. So you’re making tax savings and putting money towards your future.

6. Get your child benefit back

Got kids and getting child benefit?

Child benefit is worth £1,354.60 a year for your eldest child and £897 for each additional child. But there’s something called the ‘High Income Child Benefit Charge’. If one parent’s income reaches £60,000, they have to pay some of the child benefit back as a tax charge. If one parent’s income reaches £80,000, the tax charge cancels out the benefit entirely. These rules and income thresholds apply in the same way across the whole of the UK, regardless of where you live.

Remember, paying into your pension plan could reduce what counts as income. So depending on how much you put in, it could help you get some or all of your child benefit back. Use the government’s child benefit tax calculator to work out if you’re affected by the tax and how.

Even if your earnings mean you’ll the face the High Income Child Benefit Charge, you could still consider filling in the child benefit claim form. This can help you get National Insurance credits, which go towards your State Pension.

Preparing for the end of the tax year

Want to make the most of the benefits your pension plan has to offer? If your budget allows for it, you could consider making a one-off payment into your plan, or you might want to up your monthly payments. If you want to make a new payment before the tax year ends, it's worth checking with your provider to see if it’ll be accepted in time.

If you’re a Standard Life customer and you want to make a one-off payment, you can usually do this online or on our app. If you want to change your monthly payments and your employer set up your plan, ask them how it works for you.