Free tax tool — 2026/27
Pension Tax Relief Calculator UK 2026/27
Contributing to your pension through your limited company is one of the most tax-efficient things a director can do. The contribution is a deductible business expense — reducing your corporation tax bill — and there is no National Insurance to pay on it. This calculator shows you exactly how much tax you save compared to taking the same amount as salary or dividends.
How to use: Enter the pension contribution amount and your tax rate band. The calculator will show the corporation tax saved and the comparison against taking the same money as income.
Understanding your results
When your company makes a pension contribution on your behalf, it avoids corporation tax (19–25%), employer's NIC (15%), employee's NIC (8%), and income tax or dividend tax. Compared to taking the same amount as dividends, you typically save 40–55% in total tax. The trade-off is that you cannot access the money until age 55 (rising to 57 from 2028).
Frequently asked questions
How much can my company contribute to my pension?
There is no specific limit on employer contributions, but HMRC requires them to be "wholly and exclusively for the purposes of the business." In practice, the annual allowance of £60,000 (for 2026/27) is the main constraint. You may also be able to carry forward unused allowance from the previous three years.
Is a pension contribution better than taking dividends?
From a pure tax perspective, yes — pension contributions avoid all personal tax and NIC entirely. However, the money is locked away until retirement. The right approach depends on your cash needs now versus later. Most directors benefit from a blend: enough dividends for current living expenses, with surplus profits directed to the pension.
Can I make a large one-off pension contribution before my year-end?
Yes, and this is a common year-end tax planning strategy. A large pension contribution reduces your company's taxable profit for the period, lowering your corporation tax bill. If you have unused annual allowance from previous years, you can contribute up to £60,000 plus the carried-forward amount. This must be done before your accounting period ends to count for that year.
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Book a free discovery call →Provided by Grosvenor.Solutions. HMRC rates for 2026/27. For guidance only — does not constitute tax advice.