Help Centre for Employers

Are member contributions paid net of basic rate tax?

NOW: Pensions operates a net pay arrangement. This means that your pension contributions are collected before income tax. So, if you’re a basic rate taxpayer and you want to contribute £75 a month to your pension, £60 of your contribution comes directly from your pay, the additional £15 is the tax you would have paid on your £75 contribution. This means for income taxpayers, full tax relief at the highest rate is applied automatically and no income tax is paid on the contributions to your pension.

 

Related resources

What’s the difference between net pay and relief at source?
Are contributions taken before tax and NI?

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