SIPP Tax Relief Calculator

A SIPP (Self-Invested Personal Pension) is funded with pre-tax money. Basic rate relief is added automatically by your provider — but higher and additional rate taxpayers can claim even more back via Self Assessment. This calculator shows what your pension contributions actually cost you.

20%

Basic rate taxpayer

Pay £80, get £100 in pension

40%

Higher rate taxpayer

Pay £60, get £100 in pension

45%

Additional rate taxpayer

Pay £55, get £100 in pension

Your numbers

£500/mo
£50/mo£2,000/mo

What a £6,000 annual contribution really costs you

£3,600

effective annual cost — 60p per £1 in your pension

Your gross contribution£6,000
Basic rate relief (added automatically)−£1,200
Extra relief via Self Assessment−£1,200
Your actual cost£3,600

* Claim the extra £1,200 via your Self Assessment tax return each year.

Projection settings

25 yrs
5 yrs40 yrs
7%
2%12%

Used to model income tax on the 75% taxable drawdown portion.

SIPP vs ISA advantage (after drawdown tax)

£101,515

more in your pocket after 25 years vs investing the same net cash in an ISA

After 25 years

SIPP pot (before drawdown)£406,059

Tax-free growth; 25% PCLS + 75% taxed on drawdown

SIPP after drawdown tax£345,150

25% tax-free lump sum + 75% taxed at retirement rate

ISA (same net cost to you)£243,635

Funded only with what the pension would have cost you

Total you paid in

£90,000

Total tax relief received

£60,000

Year-by-year

YearSIPP potISA (net cost)SIPP advantage
1£6,420£3,852+£2,568
5£36,920£22,152+£14,768
10£88,702£53,221+£35,481
15£161,328£96,797+£64,531
20£263,191£157,915+£105,276
25£406,059£243,635+£162,424

* SIPP column is pre-drawdown. Final advantage figure accounts for drawdown tax.

Assumptions & notes

  • Basic rate relief (20%) is added automatically by the pension provider using the relief-at-source method.
  • Higher and additional rate taxpayers must claim their extra relief through a Self Assessment tax return.
  • The SIPP pot grows entirely tax-free inside the wrapper.
  • On drawdown, 25% is taken as a tax-free Pension Commencement Lump Sum (PCLS). The remaining 75% is taxed as income at the selected retirement rate.
  • The ISA comparison is funded with the same net-of-relief amount — i.e. what the pension actually costs you — to make it a fair comparison.
  • Annual and lifetime allowance limits are not modelled here. Consult a financial adviser for high earners.
  • This is an illustration only, not financial advice.