Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.
On a £40,000 salary, your pension tax relief depends on your marginal income tax rate and how your employer's scheme works. Below we show the relief and net cost for a £2,000 gross contribution (approximately 5% of salary) under each of the three main methods.
At £40,000, your marginal income tax rate is 20% (England, Wales and NI, 2026/27). You pay 20% income tax on your earnings above the personal allowance (£12,570). Your pension provider claims this 20% automatically under relief at source — no Self Assessment claim needed.
| Item | Relief at Source | Net Pay | Salary Sacrifice |
|---|---|---|---|
| Gross into pension | £2,000 | £2,000 | £2,000 |
| Income tax relief | £400 | £400 | £400 |
| Employee NI saving | — | — | £160 |
| Net cost to you | £1,600 | £1,600 | £1,440 |
Disclaimer: Estimates only — 2026/27 England, Wales and NI rates. Not financial advice. Actual relief depends on total income, contribution method and any other reliefs.