Tax relief is a great way to boost your pension savings. Here's how it works:
In most cases personal contributions to your Chelsea account are made as 'relief at source', which means you pay tax on the contribution first (when you are paid), and then the tax relief is added at a later date (once the contribution is in your pension).
Regardless of whether you pay basic rate, higher rate or additional rate tax, 20% will be automatically added to your pension contribution.
For example, if you contribute £800 to your pension, the government will add £200 to your pension. This usually takes 6-11 weeks to be added.
If you are a higher rate or additional rate tax payer, you can then claim the extra tax relief through self assessment. If you are an additional rate tax payer and you pay £800 to your pension, the government will still add £200 to your pension, but you can then reclaim a further £250. This means your pension contribution of £1,000 only costs you £550 personally.