Most personal and stakeholder pension providers take basic rate Income Tax into account when you make your contributions. In effect, you pay the net of tax amount into your pension and your pension provider adds the basic rate Income Tax amount (presently 20%) to your pot, recovering the tax from HMRC.

Consequently, if you are a basic rate taxpayer the Income Tax aspects are handled – in most cases – by your pensions company.

But what if you pay tax on your income at 40% or 45%?

If you are a higher rate (or additional) rate taxpayer you will need to claim an additional 20% or 25% relief on your tax return. If you are not required to submit a tax return you will need to contact HMRC with the details.

A final interesting planning point. You can still get a 20% uplift in your contributions – on the first £2,880 of contributions made – even if you do not pay tax, for example, if you are on a low income.