When you pay into your Octopus Money SIPP, the government adds extra money on top through pension tax relief. In practice, this means that for every £80 you contribute, your pension receives £100. The government tops up your contribution by 20% automatically.
If you're a higher or additional rate taxpayer, you can claim even more back through your Self Assessment tax return. Tax relief is one of the biggest benefits of saving into a pension.
How does the 20% top-up work?
Our SIPP uses a system called relief at source. Here's how it works:
- You contribute money to your SIPP (via a one-off payment or monthly Direct Debit)
- We claim 20% basic rate tax relief from HMRC on your behalf
- The top-up is added to your pension automatically
You don't need to do anything to receive this.
Example: You contribute £800. HMRC adds £200. A total of £1,000 goes into your pension.
When does tax relief appear in my account?
Tax relief is claimed from HMRC on a monthly cycle. Contributions made between the 6th of one month and the 5th of the following month receive tax relief on or after the 21st of the month after that.
For example, if you contribute on 6 February, tax relief is applied to your pension on or after 21 April. If you contribute on 4 March, it's also applied on or after 21 April (because both fall in the same claim window).
In practice, this means the top-up typically arrives 6 to 10 weeks after your contribution. You'll see it as a separate transaction in your transaction history.
Can I get more than 20%?
Yes, if you pay income tax at a higher rate.
Higher rate taxpayers (40%) can claim an additional 20% through Self Assessment. On an £800 contribution, you'd receive the automatic £200 top-up plus claim another £200 from HMRC. The true cost to you of putting £1,000 into your pension is £600.
Additional rate taxpayers (45%) can claim an additional 25% through Self Assessment. The true cost of putting £1,000 into your pension is £550.
Scottish taxpayers pay different income tax rates, so the amount of extra relief varies. You can check the details on gov.uk.
To claim extra relief, you report your pension contributions on your Self Assessment tax return.
What if I don't pay tax?
You can still get tax relief. Even if you don't earn enough to pay income tax, you can contribute up to £2,880 per year (net) and receive the 20% top-up, bringing your total pension contribution to £3,600 per year.
This applies to non-earners, children and anyone with income below the personal allowance.
How much can I contribute?
You can contribute up to £60,000 per tax year (2026/27) across all your pensions combined. This is called the annual allowance and includes your own contributions, tax relief and any employer contributions.
If you haven't used your full allowance in the previous 3 tax years, you may be able to carry forward unused allowance, potentially contributing more than £60,000 in a single year.
There are 2 situations where your annual allowance may be lower:
Money Purchase Annual Allowance (MPAA). If you've flexibly accessed a defined contribution pension (for example, taken a taxable lump sum or started drawdown), your allowance for money purchase pensions drops to £10,000.
Tapered Annual Allowance. If your adjusted income exceeds £260,000 and your threshold income exceeds £200,000, your annual allowance reduces gradually, down to a minimum of £10,000.
Good to know
Tax treatment depends on your individual circumstances and may change in the future. The figures in this article are based on current UK tax rules for the 2026/27 tax year.
We don't provide tax advice. The information above is general guidance to help you understand how pension tax relief works. For advice on your personal tax position, speak to a qualified tax adviser or accountant.
The annual allowance (£60,000) and MPAA (£10,000) are for the 2026/27 tax year and may change in future years.
Still need help?
Email us at support@octopusmoney.com or call our support team on 020 3195 4455, Monday to Friday, 9am to 5pm.