RPSM05100040 - Technical Pages: Contributions and tax relief: Overview: Tax relief

Will tax relief be given?

Contributions that are paid to a registered pension scheme may receive tax relief, but tax relief is not automatic.

Members

There is a limit on the amount of tax relief a member may receive on contributions paid by them, or other persons in respect of them. Any contributions over the tax relief limit may still be paid into the pension scheme, but the member won’t receive any tax relief on them.

Further guidance on tax relief on contributions paid by or on behalf of a member can be found at

• RPSM05101100 - entitlement to tax relief, and
• RPSM05101200 - the methods of receiving tax relief.

It should be noted that if these total contributions result in the annual allowance being exceeded, there might be a tax charge on the member. Further guidance on the impact of the annual allowance on members can be found at RPSM06100000.

Employers

Unlike for scheme members there is no set limit on the amount of tax relief that an employer may receive in respect of its contributions. However tax relief is not automatic; it will be considered under the normal tax rules as a business expense.

There are also special rules for where a large one off contribution is made. These special rules allow tax relief to be spread over several years rather than be given in full in the year that the contribution is actually paid.

Further guidance on employer’s entitlement to tax relief can be found at RPSM05102000.

Other persons

As a general rule contributions paid by other persons are regarded as member contributions. This means other persons are not entitled to tax relief against any contributions they make. (But see RPSM05101320 for a practical exception in the case of third party contributions.)