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2026/27 tax year

Pension Tax Relief on a £120,000 Income 2026/27

With a £6,000 gross contribution under relief at source, total pension tax relief is £2,400. Net cost to you: £3,600 (£300/month). Under salary sacrifice, the effective cost drops further to £3,480.

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Results — £120,000 income, £6,000 contribution
Relief at source
Gross contribution
£6,000
Total relief
£2,400
Net cost
£3,600
Marginal rate
40%
Basic rate relief (20%) £1,200
Higher rate extra relief £1,200
Monthly net cost £300/month
Salary sacrifice
Gross contribution
£6,000
Total tax relief
£2,400
Net cost (incl. NI)
£3,480
Marginal rate
40%
Tax relief (income tax) £2,400
Employee NI saving £120
Employer NI saving £900
How relief works at £120,000

Which tax band applies and what relief you get

On a £120,000 income you are a higher-rate taxpayer paying 40% on income above £50,270 — your personal allowance is also reduced by the £100k taper. Your marginal income tax rate is 40%.

Under relief at source, your provider claims 20% basic rate relief automatically from HMRC. You claim the additional 20% extra relief via Self Assessment — totalling £2,400 on a £6,000 contribution.

Under salary sacrifice, your gross salary is reduced by £6,000 before income tax and National Insurance are calculated. This saves you income tax and employee NI (saving an additional £120), bringing your effective net cost down to £3,480. Your employer also saves NI of £900 — some employers pass this saving into your pension.

Model your own figures — change income, contribution amount, method or region in the full calculator.

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Other income levels
£20,000 £25,000 £30,000 £35,000 £40,000 £45,000 £50,000 £60,000 £75,000 £100,000 £120,000 £150,000
Figures are estimates for the 2026/27 tax year, England/Wales/NI, using a 5% contribution scenario. Results are not financial or tax advice. Consult a qualified adviser for personal guidance. GOV.UK pension tax relief · Methodology