16/06/2026
81.8% return!
I recently met with a successful professional in their early 40s.
Strong salary, Property portfolio, Investments, Healthy cash reserves.
They’d built an impressive asset base over the years, but one area had been largely neglected: their pension.
Like many people, they had focused on what they knew best. In this case, property.
During our discussion, we looked at the tax advantages available through pension contributions as an additional-rate taxpayer.
What surprised them most was how the tax relief actually works.
For every £800 they contribute, the pension provider claims £200 basic-rate tax relief directly from HMRC, meaning £1,000 is immediately invested into the pension.
On top of that, as an additional-rate taxpayer, they can claim a further £250 back through their self-assessment tax return.
So the end result looks like this:
➡️ £1,000 invested into the pension
➡️ £250 reclaimed through self-assessment
➡️ Net cost of £550
When you realise that £550 of your own money can result in £1,000 being invested for your future, pensions suddenly become a lot more interesting and an 81.8% return isn’t that hard to find!
The conversation quickly shifted from:
“Should I contribute more?”
to
“How much can I afford to contribute?”
Sometimes the biggest financial planning opportunities aren’t about finding a better investment. They’re about understanding and making full use of the tax reliefs already available to you.
