What are pension contributions?

Payments you pay into a pension are called your pension contributions. Contributions to workplace pensions are paid by you, the employee, employer and the government. Although it isn’t always a given with some types of pension, people make higher pension contributions to increase the pension payments they later receive.

Contributions made to HMRC-registered private pension schemes, which includes workplace pensions, personal and stakeholder pensions and some overseas pension schemes, are tax-free up to set thresholds.

Tax is normally payable if savings in your pension pot go over 100% of your earnings in a year or above £60,000 a year (your annual allowance). Tax can also be payable if your pension provider isn’t registered for tax relief with HMRC or they don’t invest your pension savings as per HMRC requirements. UK tax relief can be claimable on contributions made into some types of overseas pension schemes.

Any unused annual allowance from the previous three tax years can be carried forward if you paid into a registered pension scheme during that period. This can benefit self-employed workers whose earnings are different year to year or they want to make large pension contributions.

To report pension contributions to HMRC, you include the total gross value of your personal pension contributions in the tax reliefs section of your SA100 Self Assessment tax return (under “Payments to registered pension schemes where basic-rate tax relief will be claimed by your pension provider”). On page 4 of the SA100 Self Assessment tax return, you fill in boxes 1 to 3 for payments to registered pension schemes and box 4 for payments to overseas pension schemes.