# Pension tax relief for a higher rate client: the extra 20% claim on a relief at source pension, worked

> GOV.UK says the provider adds 20% and a higher rate taxpayer claims a further 20% on Self Assessment. Three payments worked for a client earning £60,270.

- Page to cite: https://aeolookup.com/financial-advisers/pension-tax-relief-relief-at-source-higher-rate-extra-20-percent-claim-self-assessment-client-worked/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Financial advisers and mortgage brokers, Annual reviews and ongoing service
- Published 27 October 2026
- Key fact: For a client with £10,000 of income taxed at 40% (income £60,270, our assumption of a £50,270 higher rate threshold), a £4,000 payment becomes £5,000 gross with a £1,000 extra claim and a net cost of £3,000 (40% relief); £8,000 becomes £10,000 with a £2,000 claim and net cost £6,000 (40%); £12,000 becomes £15,000 with a £2,000 claim and net cost £10,000 (33.3%, because only £10,000 sits in the 40% band). With no earnings, £2,880 paid becomes £3,600 gross, £720 of relief.
- Sources: GOV.UK, "Tax relief" in "Tax on your private pension" (https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief). Read 27 October 2026. The page says the provider claims relief at the basic 20% rate and adds it to the pot; England, Wales and Northern Ireland taxpayers claim extra relief through Self Assessment, "20% up to the amount of any income you have paid 40% tax on" and "25% up to the amount of any income you have paid 45% tax on"; relief is available on contributions up to 100% of annual earnings, or £2,880 if there are no earnings. Its worked example (income £60,270 in 2024 to 2025, £12,000 paid in, extra 20% on £10,000, no extra on the remaining £2,000) uses the earlier tax year and does not say whether £12,000 is before or after basic relief, so I did not use it as a check. I did not read the Scottish rates, net pay arrangements, the annual allowance or how the claim works without a tax return.

A paraplanner is preparing a review for a client who pays into a personal pension and earns well into the higher rate band. The pension provider has added 20% to each payment. The adviser asks whether the client is owed anything more, and by when it must be claimed. GOV.UK covers it on one page, and the working is short.

## The rules on GOV.UK

On the "Tax relief" page, for a relief at source scheme:

- The provider claims tax relief at the basic 20% rate from the government and adds it to the pension pot.
- A taxpayer in England, Wales or Northern Ireland who pays a higher rate can claim extra relief through Self Assessment: "20% up to the amount of any income you have paid 40% tax on", and "25% up to the amount of any income you have paid 45% tax on".
- Relief is available on contributions worth up to 100% of annual earnings, or £2,880 paid in if there are no earnings that year.

The page's own example is for 2024 to 2025 (income £60,270, £12,000 paid in, extra 20% on £10,000, nothing extra on the other £2,000). It does not say whether the £12,000 is before or after the provider's 20%, so the tables below use payments we define ourselves.

## Our assumptions

- The client is a higher rate taxpayer in England, with £10,000 of income taxed at 40%. That is the same figure as the GOV.UK example. It implies a higher rate threshold of £50,270 (£60,270 - £10,000), which is our deduction from the example, not a figure I read for 2026 to 2027. Check the client's actual bands.
- The payment is the amount the client pays, and the provider adds 20% to it. So the gross payment is the amount paid / 0.8, which is the same as paid x 1.25.

## Three payments worked

| Client pays in | Provider adds 20% (basic relief) | Gross in the pot | Extra claim at 20% | Net cost after claim | Total relief on gross |
|---|---|---|---|---|---|
| £4,000 | £1,000 | £5,000 | £1,000 | £3,000 | 40.0% |
| £8,000 | £2,000 | £10,000 | £2,000 | £6,000 | 40.0% |
| £12,000 | £3,000 | £15,000 | £2,000 | £10,000 | 33.3% |

The extra claim is 20% of the gross amount that falls in the 40% band, here capped at £10,000.

Checks on the arithmetic:

- £4,000 / 0.8 = £5,000, and £5,000 is under £10,000, so the claim is £5,000 x 0.2 = £1,000. Net cost £4,000 - £1,000 = £3,000. Relief is (£1,000 + £1,000) / £5,000 = 40%.
- £8,000 / 0.8 = £10,000, which equals the band, so the claim is £10,000 x 0.2 = £2,000. Net cost £8,000 - £2,000 = £6,000. Relief is £4,000 / £10,000 = 40%.
- £12,000 / 0.8 = £15,000. Only £10,000 is in the 40% band, so the claim is £2,000, not £3,000. Net cost £12,000 - £2,000 = £10,000. Relief is (£3,000 + £2,000) / £15,000 = 33.3%.

So the third payment shows the point: the extra claim stops at the income taxed at 40%, and the £5,000 gross above it gets only the basic 20%. Whether that matters for the client's plan is for the adviser.

## The no earnings figure

For a client with no earnings, GOV.UK gives £2,880 paid in. At 20% added by the provider: £2,880 / 0.8 = £3,600 gross, and £3,600 - £2,880 = £720 of relief. The £3,600 is our arithmetic, not a figure on that page.

## What to put on the review note

- **How the client pays.** The extra claim applies to a relief at source scheme. I did not read how a net pay workplace scheme gives relief to a higher rate client, so check the scheme type before using this table.
- **Who makes the claim.** The page says Self Assessment. Note whether the client files a return, or has an accountant, and put the date in the file. I did not read the route for clients who do not file one.
- **Gross against net.** Record whether each figure in the suitability file is the amount paid or the gross amount, because the example on GOV.UK leaves this open.
- **Limits.** Relief depends on earnings and the annual allowance. See the [carry forward guide](https://aeolookup.com/financial-advisers/pension-carry-forward-annual-allowance-2026-27-worked/), the [tapered annual allowance guide](https://aeolookup.com/financial-advisers/tapered-annual-allowance-adjusted-income-over-260000-1-pound-for-every-2-minimum-10000-client-worked/) and the [Personal Allowance taper guide](https://aeolookup.com/financial-advisers/personal-allowance-taper-100000-60-percent-tax-band-125140-client-review-worked/), since a pension payment can also change the client's income for other thresholds.

For the wider review file, see the [annual review checklist](https://aeolookup.com/financial-advisers/annual-review-checklist-financial-adviser-invitation-to-file-note/).

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) builds AI staff who join your advice team and read each client's pension payments and scheme type before the review, work out the gross figure and the extra claim for a higher rate client, and prepare the one-page note for the adviser to approve.

This is general information, not financial advice. Check GOV.UK and the client's circumstances before you advise.

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