One of the best things about saving into a workplace pension is tax relief. For every 80p you contribute to your Nest pension, we’ll claim 20p from the government on your behalf and add this extra money to your pension pot - if you’re eligible.
On top of tax relief, there are many other reasons why saving into a workplace pension like Nest can be a good idea.
The tax relief we claim for you is set at 20%, which is the basic rate of tax you pay on your earnings. Instead of this money going to the government, it goes into your pension pot for you and grows over time.
As tax relief is worked out as a percentage, the more you contribute the more we can claim back for you.
For most people, you won't need to do a thing. We'll reclaim all the tax relief that's due to you and add it to your pot.
If you're a higher rate taxpayer, you're entitled to claim any tax relief above the basic 20%. You'll need to do this by contacting HMRC who may ask you to complete a Self Assessment tax return form. HMRC will either pay you the additional tax relief or change your tax code. The extra money won’t be paid into your pension pot.
You should see the extra money added to your Nest pension pot within three months.
Tax relief applies to the contributions you make from your salary as well as any additional payment you make to top up your pot. It doesn't apply to employer contributions. That means the more you contribute, the more tax relief you benefit, but you won't get a corresponding increase in employer contributions.
No, these are different benefits. The 25% tax-free allowance applies to anything you withdraw from your pension pot. Remember, you can only access your savings after you turn 55.
All eligible taxpayers get 20% tax relief on their contributions. If you're a higher rate taxpayer, you can get additional tax relief - but you must apply for it through HMRC. This additional tax relief goes straight to you rather than being paid into your pot.