The government wants people to save for their retirement but realises that people might not want to commit to saving in a pension that they may not be able to access for some years. To encourage people to save, the government gives tax breaks on your pension contributions.

Tax breaks mean that for every £100 you save into your pension, it only costs you £80, or even less. For higher rate taxpayers this could be as little as £60, or £55 for additional rate taxpayers. Tax relief on the payments that you personally make to pensions is limited to 100% of your earnings (or £3,600 if this is more). The way in which the tax breaks are given depends on the type of pension scheme you're in and also whether or not you use salary exchange (also known as salary sacrifice). More information on pensions and tax breaks can be found on the Pensions Advisory Service website.

Your own circumstances and where you live in the UK will also have an impact on tax treatment. The information provided here is based on our understanding as at April 2020.

All payments by or on behalf of you count towards your annual allowance. You can find out more information on gov.uk.

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