How much tax relief (tax top-up) you receive from the government, is dependent on what tax bracket you are on. However, the money you contribute into your pension will automatically receive a 25% tax top up contribution from the government. 

Remember if you pay into your pension through your company, you won't receive tax top ups, as they are a business expense and reduct your corporation tax!

If you are a basic-rate taxpayer, you will receive this 25% tax top up contribution from the government only.

For example, if a basic-rate taxpayer makes a £1000 contribution into their pension, they will receive a £250 tax top up contribution from the government back into their pension. 

If you are a higher-rate taxpayer, you can claim an additional 41% tax top up contribution from the government, as part of your annual tax return. This means you receive a total 66% tax top up contribution. 

For example, if a higher-rate taxpayer makes a £1000 contribution into their pension, they will receive a £250 tax top up contribution from the government back into their pension. 

On top of this, once this taxpayer has submitted their tax return, they will receive an additional £410 as tax relief from the government back into their personal bank account. This means that a higher-rate taxpayer has received a total £660 tax top up contribution from the government, which is 66% of their £1000 pension contribution.

Where do these numbers come from?

Tax relief is calculated on your pre-tax earnings. Therefore, when a basic rate taxpayer invests £80 of their take-home pay into their pension, they would have actually earned £100 before tax. This is why the government would add a £20 contribution. Here, the tax relief is 20% of the £100 ie: £20. But of course, £20 is 25% of £80. This is why we say basic rate taxpayers get an additional 25% tax top up contribution, and high rate taxpayers get an additional 66% tax top up contribution from the government. 

It's Important to Remember that

if you pay into your pension through your Ltd company, you won't receive tax top ups, as they are a business expense and reduce your corporation tax. Also the amount you can get in total from tax top ups is dependant on your individual situation and can change in the future.