How relief works
With relief at source, you pay £80 and the provider claims £20 to make £100. Higher and additional-rate taxpayers claim a further 20% or 25% on the part of the contribution taxed at those rates. Salary sacrifice also saves National Insurance (NI relief on sacrifice above £2,000 a year is due to end from April 2029).
FAQ
How much does a £4,000 pension contribution cost a higher-rate taxpayer?
It becomes £5,000 in the pension and costs £3,000 after claiming the extra £1,000 relief.
Sources (checked 6 Nov 2026): HMRC pensions tax relief; Autumn Budget 2025 (salary sacrifice cap from April 2029).