The key to a successful retirement? Contributing consistently and maximising your tax relief.
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These guides do not purport to explain all of these topics in detail and Killik & Co accepts no liability for any reliance placed or investment or planning decisions made from it.
You can contribute up to £60,000 per year (or 100% of your UK earnings, whichever is lower) for the 2025/26 tax year. Even with no earnings, you can still contribute £3,600 annually.
If your total income exceeds £260,000, your annual allowance reduces. For every £2 above this threshold, your allowance decreases by £1.
Tax relief benefits
Every pension contribution receives automatic 20% tax relief.
Contribute £800, and it becomes £1,000 in your pension pot.
Higher and additional rate taxpayers can claim extra relief:
40% taxpayers: Claim an additional 20% relief through Self-Assessment
45% taxpayers: Claim an additional 25% relief through Self-Assessment
Financial experts recommend around 15% of your gross income throughout your working life, including employer contributions. Or, contribute half your age as a percentage. At 30, aim for 15%; at 40, target 20%.
Contribution examples
£30,000 salary (15% target = £4,500 annually):
With employer contribution (3%): £900
Your contribution needed: £3,600
After 20% tax relief: £2,880 from take-home pay
£50,000 salary (15% target = £7,500 annually):
With employer contribution (3%): £1,500
Your contribution needed: £6,000
After 20% tax relief: £4,800 from take-home pay
Please be aware that the value of your investments may fall as well as rise. The content of this blog post reflects our current understanding of UK legislation and only impacts those within the UK tax system. Tax treatment depends on personal circumstances, and the rules may be subject to future change.
Thanks to compound growth, contributing £200 monthly from age 25 builds a larger pension than contributing £500 monthly from age 40.
Our Wealth Planners and Advisers help you:
Optimise contribution timing and tax efficiency
Navigate carry forward opportunities
Choose between workplace pensions and Self-Invested Personal Pensions (SIPPs)
Plan withdrawal strategies to minimise tax
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