Pensions and SIPPs
Pensions add tax relief to what you pay in. These guides explain tax relief, the limits and how self-invested pensions work.
- Pension Tax Relief Explained (2026/27)How pension tax relief works in 2026/27: relief at source, net pay, higher-rate claims, Scottish rates, the £60,000 annual allowance and other key limits. Updated 10 October 2026.
- SIPPs Explained: Self-Invested PensionsWhat a SIPP is, how tax relief works, what you can invest in, costs, transferring old pensions safely, protection, and when you can take your money out. Updated 10 October 2026.
How do pensions save you tax?
When you pay into a pension, the government adds tax relief. At the basic rate, £80 from you becomes £100 in your pension, and higher-rate taxpayers can claim back up to a further £20, or £25 at the additional rate. Growth inside a pension is free of income tax and Capital Gains Tax. When you take money out, usually a quarter is tax-free and the rest is taxed as income. Our guide to pension tax relief explains how it's given, how to claim the extra and the rules in Scotland.
How much can you pay into a pension?
You get tax relief on your own payments up to 100% of your earnings each tax year, or £3,600 including relief if you earn less than that. Total payments from you, your employer and tax relief count towards an annual allowance of £60,000 in 2026/27. It's lower for very high earners and for people who have already started taking taxable money from a defined contribution pension. You can also carry forward unused allowance from the previous three tax years.
Workplace pension, personal pension or SIPP?
Most employees are automatically enrolled into a workplace pension, with at least 8% of qualifying earnings going in, including at least 3% from the employer. A personal pension is one you set up yourself. A SIPP is a personal pension where you choose the investments, such as funds, ETFs and shares, usually through an investment platform. Many people have both: a workplace pension for the employer contributions, and a SIPP for extra savings or to bring old pensions together.
When can you take money from a pension?
You can usually access a personal or workplace defined contribution pension from 55, rising to 57 from 6 April 2028, unless you have a protected earlier pension age. The State Pension is separate and starts later. From 6 April 2027, unused pension savings will usually count towards your estate for inheritance tax. If you're 50 or over, Pension Wise from MoneyHelper offers a free appointment to talk through your options.
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