We operate a net pay scheme, which means pension contributions come out of your pay before income tax is taken. If you’re a taxpayer you get automatic tax relief, but if you don’t pay tax you don’t get any tax relief.
What are tax top-ups?
If you haven’t paid tax on any of your UK earnings, we promise to top up your pension savings by the amount of tax relief you’ve missed out on each tax year.
Who can apply?
You can apply for a tax top-up if you earned less than £12,570 in total earned income for the 2023-2024 tax year (6 April 2023 to 5 April 2024).
How to apply
We can’t make the payment directly to you, so you’ll also need to give HM Revenue & Customs permission to tell us about your tax situation. You can do this through our claim form, which will open in autumn 2024.
If your claim is successful, we’ll add this money to your pension savings. Remember, if the money is credited to your pension savings, you won’t be able to access it until you’re aged at least 55, but it will be added to your savings and invested on your behalf.
Applications are closed for now
We’ll open the scheme for the 2023-2024 tax year in autumn 2024.
Frequently asked questions
We have a net pay scheme, which means pension contributions come out of your pay before income tax is taken off. If you’re a taxpayer you get automatic tax relief, but if you don’t pay tax you don’t get any tax relief. NOW: Pensions wants to make sure non-taxpayers don’t miss out, so we have our own tax top-up scheme.
If you haven’t paid tax on any of your UK earnings in a tax year (April to April), we promise to top up your pension savings by the amount of tax relief you’ve missed out on for that year. You can do this at the end of each year.
We’ll open the tax top-up scheme for the 2023-2024 tax year in autumn 2024.
You can apply for a tax top-up if you earned less than £12,570 in total earned income for the 2023-2024 tax year (6 April 2023 to 5 April 2024). When the scheme opens you’ll be able to claim online and give HMRC permission to tell us about your tax situation.
Yes. NOW: Pensions operates a net pay scheme, so your contributions come out of your pay before income tax is taken off. So if you’re a taxpayer, you automatically get full tax relief – you don’t pay any income tax on the money you contribute to your pension. However, if you don’t pay any tax you don’t automatically get tax relief.
Although the government is taking steps to address this, NOW: Pensions wants to make sure non-taxpayers don’t miss out, so we have our own tax top-up scheme. If you haven’t paid tax on any of your UK earnings, we promise to top up your pension savings by the amount of tax relief you’ve missed out each tax year.
You can do this at the end of each year. Just fill in our tax top-up scheme form.
You can contribute up to 100% of your salary towards your pension savings and still get tax relief, as long as the combined contributions from you and your employer are below the annual allowance. This applies to all the pensions you’re actively saving into, including NOW: Pensions and any personal pensions you have. It doesn’t apply to your State Pension.
For most people, the current annual allowance is £60,000 for the tax year 2024-2025. If you go over this you’ll have to pay tax on the amount over the allowance.
If you start taking money out of your pension savings while you’re still paying in to them, the money purchase annual allowance – currently £10,000 a year – could affect you. This means the total amount you and your workplace can pay into your pension savings and still get tax relief goes down to £10,000 a year.
We operate a net pay scheme. Pension contributions are deducted from employees’ pay and paid over to the Scheme before income tax is calculated.
You’ll need to:
- calculate pension contributions on gross (before tax) pay and
- work out your employees’ income tax after their pension contributions have been deducted.
As a result your employees who are taxpayers won’t pay any income tax on their pension contributions. They automatically get full tax relief.
Employees who don’t earn enough to pay tax don’t normally get tax relief – but we’ve set up our Scheme so they don’t miss out. We have a tax top-up scheme so employees who don’t pay tax can claim tax relief and have it added to their pension savings in the Scheme. (Employees must claim this themselves – it’s not something you can do on their behalf as their employer.)
What other types of tax relief are there?
There’s another type of tax relief arrangement called relief at source. In this kind of scheme, the employer must deduct 80% of employees’ pension contributions from their take-home pay (after income tax has been taken off).
The pension scheme claims the tax relief from HM Revenue & Customs (HMRC) each month and pays it back to the employee. HMRC only sends back the basic rate of tax: 20%.
Higher or additional-rate taxpayers can claim back the rest of the tax relief from HMRC either by writing to them separately, or through their annual self-assessment tax return.
Net pay
NOW: Pensions operates a net pay scheme. This means pension contributions come out of your pay before income tax is taken off. As a result, if you’re a taxpayer you automatically get full tax relief – you don’t pay any income tax on the money you contribute to your pension.
If you don’t pay tax, you don’t automatically get tax relief, but you can claim your tax relief through our tax top-up scheme. See What is the tax top-up scheme? for more about this.
Other types of tax relief
You may have seen another tax relief arrangement, called a relief at source scheme, in other pensions. In this kind of scheme, if you pay basic-rate tax at 20%, 80% of your pension contributions come out of your take-home pay after income tax has been taken off.
The pension scheme then claims the tax relief from HM Revenue & Customs (HMRC) each month and pays it back.
HMRC only sends back the basic rate of tax: 20%. Higher or additional-rate taxpayers can claim back the rest of the tax relief from HMRC either by writing to them separately, or through their annual self-assessment tax return.