If I increase my contributions, can I get my personal allowance back?


Contributing to your pension pot reduces your taxable income and can give you back some or all of your £12,570 personal allowance (2021/22 figure). This allowance is progressively withdrawn once your earnings exceed £100,000. You lose £1 of the allowance for each £2 you earn above £100,000, meaning that the whole personal allowance is wiped out when earnings reach £125,140

If you’re a higher rate taxpayer with a taxable income of between £100,000 and £125,140, a pension contribution that reduces your taxable income to £100,000 would give an effective rate of tax relief of 60%. For those on higher incomes, or making bigger contributions, the effective rate would be between 40% and 60%.

Pensions and tax can be complex, so it’s a good idea to get some financial advice to find out what’s best for your circumstances.

Was this article helpful?

Please score it so we can improve and offer you more

 Members 15 people found this helpful