If you're a basic rate taxpayer, you pay 20% tax on your income. That means for every £100 you earn, you keep £80 after tax.
To add that £20 back into your pension, HMRC tops up your £80 contribution by 25% — which brings your total pension contribution back to £100.
Here’s how it works:
You contribute £80 from your take-home pay
HMRC adds £20 in tax relief
Your pension receives £100 in total
Want to dive deeper? Check out this page where we explain pension tax relief in more detail.