Six tips to help boost your pension savings before the end of the tax year 2024/25

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5 April is the last day of the current tax year – and there are things you can do to make the most of your pension plan’s tax benefits before then. Here are our top tips to help you give your pension savings a boost before the tax year is up.

1. Use your pension annual allowance

Your pension annual allowance is the total that can usually be paid in across your pension plans in a tax year before a tax charge could apply. The annual allowance is currently £60,000. But it could be less if you’re a higher earner (usually if you have ‘income’ above £200,000) or a non-earner, or if you’ve started taking money from your pension savings. You can find out more on MoneyHelper.

Your allowance renews at the start of the new tax year. If you’re paying into a pension plan, make sure you know what your allowance is. It’s then worth checking how much you’re paying into your plan and making sure that’s still right for your circumstances. You could consider paying more in before the end of the tax year to make the most of your allowance.

If you’ve used all of your annual allowance for the 2024/25 tax year, you might be able to use unused allowances from the last three tax years (known as ‘carry forward’). Check GOV.UK to find out who can and can’t do this.

2. Top up your pension payments with tax relief

People can get ‘tax relief’ on their payments into their pension plan. This means their payments get topped up by the government – which can make a big difference. How much of a boost you can get depends on the amount of income tax you pay.

For example, if you pay income tax at the basic rate of 20%, you can get a 20% top-up from the government on your payments into your pension plan. This means it’d cost you £80 to get £100 paid in. And it’d cost you less if you’re a higher or additional-rate taxpayer. 

If you’re a higher or an additional-rate taxpayer, you may need to claim tax relief back from the government through a tax return, as they won’t automatically add anything above 20%.

Some workplace pension schemes – for example, salary sacrifice or salary exchange schemes – offer tax benefits in a different way. Check with your employer how this works for you if you’re not sure.

You can only get tax relief on your payments up to your pension annual allowance (usually £60,000) or your total relevant UK earnings – whichever is lower. Relevant UK earnings include your salary from work, but other things too, so do check. And you can only get tax relief if you’re under 75.

3. Ask about your workplace pension plan

Got a pension plan through your job? Your employer usually pays in too. At least 8% of your ‘qualifying earnings’ usually needs to be paid in. A minimum of 3% usually comes from your employer, while a 5% minimum usually comes from you.

Some employers will pay in more than the minimum or match the percentage you’re paying into your plan up to a certain amount. So it’s worth checking with them to see if they’d be willing to do this.

4. Consider bonus sacrifice

If you get a work bonus, you might have the option to put some or all of it into your pension plan. Doing this could save on tax and National Insurance deductions, meaning you could potentially keep more of your bonus in the long run. You could check if your employer offers this.

5. Get your tax-free personal allowance back

You usually have a ‘personal allowance’, which is the amount of income you don’t have to pay tax on. For most people, it’s £12,570. So if your income is £30,000, you normally won’t need to pay tax on £12,570 of that.

When your taxable income is more than £100,000, your personal allowance is reduced by £1 for every £2 above this amount. So you lose the personal allowance once your income is £125,140 or more.

You might be able to recover some or all of your personal allowance by paying into your pension plan (depending on how much you pay in), as this can reduce your ‘adjusted net income’. So you’re making tax savings and putting money towards your future.

6. Get your child benefit back

Got kids and getting child benefit? Worth over £2,000 a year to a two-child family, child benefit is currently reduced by the ‘High Income Child Benefit Charge’ when one parent’s income reaches £60,000. If one parent’s income reaches £80,000, the tax charge cancels out the benefit entirely. 

Remember, paying into your pension plan could reduce what counts as income. So depending on how much you put in, it could help you get some or all of your child benefit back. Use the government’s child benefit tax calculator to work out if you’re affected by the tax and how.

Even if your earnings mean you’ll the face the High Income Child Benefit Charge, you could still consider filling in the child benefit claim form. This can help you get National Insurance credits, which go towards your State Pension.

Preparing for the end of the tax year

Want to make the most of the benefits your pension plan has to offer? If your budget allows for it, you could consider making a one-off payment into your plan, or you might want to up your monthly payments.

If you’re a Standard Life customer and you want to make a one-off payment, you can usually do this online or on our app. If you want to change your monthly payments and your employer set up your plan, ask them how it works for you.