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Do I automatically receive tax relief with a salary sacrifice scheme or should I be claiming it via a tax return?

22 September 2021

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Question by Graham


I am a PAYE employee, I pay into a DC workplace pension, I live in Scotland and earn a pensionable income of £63k p.a.

I make employee contributions of 4% and have an employer contribution of 8% but the pension is part of a salary sacrifice scheme.

My question is: am I automatically receiving the additional 20% (Scotland 21% ???) tax relief due to the salary sacrifice nature of the scheme or should I be claiming it separately via a tax return?

Many thanks

Answered by Joshua Gerstler

Hi Graham,

When you enrol in a Salary Sacrifice scheme, you are giving up some of your salary and instead your employer is contributing into your pension.

One advantage of this is that you do not pay the Income Tax or National Insurance on the salary you have sacrificed.

As you have not paid any Income Tax on this money, there is no additional tax relief for you claim via Self Assessment.

If you make a pension contribution out of money that has been taxed, then you would be bale to claim the additional tax relief.

I hope that helps.

Please feel free to get in touch with any other questions you may have.


Answered by

Joshua Gerstler

Chartered Financial Planner

I have been working in Financial Services for over 16 years. I started out at Deloitte where I trained and qualified as a Chartered Accountant before moving to Financial Advice/Planning at The Orchard Practice in 2011.