Tax relief on pension contributions
Tax relief available for personal contributions is the higher of £3,600 (gross) or
100% of relevant earnings.
Any contributions in excess of £60,000, whether personal or by the employer, may be
subject to income tax on the individual.
The limit may be reduced to £10,000 once money purchase pensions are accessed.
Where the £60,000 limit is not fully used it may be possible to carry the unused
amount forward for three years.
The annual allowance is tapered for those with adjusted income over £260,000. For
every £2 of income over £260,000 an individual's annual allowance will be
reduced by £1, down to a minimum of £10,000.
Employers will obtain tax relief on employer contributions if they are paid and made
'wholly and exclusively' for the purposes of the business. The tax relief for large
contributions may be spread over several years.
Pensions automatic enrolment
Auto enrolment places duties on employers to automatically enrol 'workers' into a work
based pension scheme. Employers are required to automatically enrol all 'eligible
jobholders' into a qualifying pension scheme and pay pension contributions on their
behalf.
Employer minimum contribution: 3%
Total minimum contribution: 8%
Where the employer does not make the total minimum contribution the employee is obliged
to pay the balance.
| |
2025/26 (£) |
2024/25 (£) |
| Automatic enrolment earnings trigger |
10,000 |
10,000 |
| Qualifying earnings band - lower limit |
6,240 |
6,240 |
| Qualifying earnings band - upper limit |
50,270 |
50,270 |
State Pensions
The basic State Pension is a regular payment from the government that an individual may
be entitled to when they reach 'State Pension age'.
The basic State Pension depends on the number of years an individual has paid National
Insurance or got National Insurance credits, eg while unemployed or claiming certain
benefits.
To receive the basic State Pension an individual must have paid or been credited with
National Insurance contributions (NIC).
In 2016 the State Pension was reformed into a single-tier new State Pension. In order to
benefit from the full amount the individual will need 35 years, rather than the previous
30 years of NIC or credits for the full amount, with pro-rating where 35 years is not
achieved. You will usually need 10 qualifying years to get any State Pension. The amount
an individual receives can be higher or lower depending on their National Insurance
record. It will only be higher if you have over a certain amount of Additional State
Pension.
Currently an individual may also be entitled to the Additional State Pension. How much an
individual gets depends on the number of qualifying years of NIC, the amount of earnings
and whether the individual has been contracted out of the scheme.
| Weekly Basic State Pension |
2025/26 (£) |
2024/25 (£) |
| Basic - single person |
176.45 |
169.50 |
| New State Pension |
230.25 |
221.20 |