Pensions are a tax-efficient way to invest for retirement. The problem is that it can be slightly opaque when it comes to accessing some of that tax relief.
It is, however, easy when you know how. So, we’ve taken some of the most common questions about tax relief that we see and answered them here, meaning you can invest confidently and tax-efficiently.
“I’ve never heard of tax relief. Does it actually matter to me? I’m not a billionaire”
Yes, it really does.
Whenever you pay into a pension, the government tops it up. It’s their way of encouraging you to save for retirement.
Here’s how it works in practice:
- Basic rate taxpayers (20%)
You contribute £80, and HMRC automatically adds £20. That makes it £100 in your pension.
Why people get confused: that £20 is 20% of your earnings, but it’s a 25% boost on what you personally put in (£20 on £80). - Higher rate taxpayers (40%)
You get the same £20 automatic top-up, but you can claim back another £20 through self-assessment or PIE.
So, your £80 contribution becomes £120 in your pension, and you’ve also reclaimed £20 back personally via your tax return. - Additional rate taxpayers (45%)
You contribute £80 → HMRC adds £20 automatically.
You can then claim back an extra £25. So the £80 out of your pocket is worth £125 in your pension, plus £25 back personally.
The takeaway:
- Basic rate = 25% boost
- Higher rate = 67% boost (£80 → £120 + £20 back)
- Additional rate = 81% boost (£80 → £125 + £25 back)
It’s one of the most generous financial perks available — and too many people miss it because they assume it’s complicated.
In short: the more tax you pay, the bigger your potential relief. You can use our tax relief calculator to easily find out how much you can claim back.
“Sounds complicated. I’m not sure I’ll understand this…”
You don’t need to be an accountant. Think of it like a cashback scheme for your pension:
- Basic rate relief is added for you automatically by your pension provider.
- Higher and additional rate relief has to be reclaimed — usually through a tax return.
- Either way, it’s your money being refunded.
So, it’s not a bonus. It’s simply money you’ve already paid in tax, being given back to boost your retirement savings.
“So how do I actually claim it?”
If you’re a basic rate taxpayer, good news: it’s automatic. Your pension provider claims the 20% top-up from HMRC and adds it to your account.
If you pay higher or additional rate tax, you need to claim the extra relief yourself. Traditionally, that meant filling in a self-assessment tax return each year, which can feel like a headache.
That’s why we’ve partnered with PIE. Instead of wrestling with forms, you can:
- Log in to PIE through your InvestEngine dashboard
- Enter how much you’ve contributed (clearly shown in your transactions)
- PIE reclaims your extra relief from HMRC on your behalf
No forms. No hassle. Just money back.
“Does timing matter?”
Yes, because tax relief is tied to the tax year. Here are the key things to know:
- The UK tax year runs 6 April to 5 April.
- You can claim tax relief on contributions made in that tax year.
- If you missed claiming, you can go back and reclaim for up to 3 previous tax years.
So if you’re a higher or additional rate taxpayer and haven’t been claiming, you could be due a sizeable refund.
“Will I know how much I’m getting back?”
Yes. We’ll even show you an estimate in your dashboard based on your contributions.
For example:
- Contribute £2,000 into your SIPP
- HMRC automatically adds £500 (basic rate relief)
- If you’re a higher rate taxpayer, you could claim an extra £500
- Additional rate? You could reclaim up to £630 more
That’s money that could be working for you in your pension instead of sitting with HMRC.
“Why is InvestEngine doing this?”
We already help you keep more of what’s yours with our low fees (ETF costs apply). With PIE, we go further, helping you get back what’s yours in pension tax relief. We want to ensure our customers have the tools they need to make the most out of their pension.
“What do I do next?”
- Already have a SIPP with us? Check your dashboard and start your claim with PIE.
- Not yet investing in a SIPP? Open one with InvestEngine today and take advantage of tax relief from the start.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up, and you may get back less than you invest.
Tax treatment depends on personal circumstances and may change. ETF costs apply. InvestEngine does not provide tax advice.