Can I get tax relief on pension contributions as a sole trader?

Yes. In 2026-27 you get tax relief on pension contributions up to 100% of your UK earnings. Your provider claims 20% basic rate relief, so £80 you pay becomes £100. Higher-rate relief is claimed on your tax return.

There is no employer to set up a pension for you when you work for yourself, so the relief only arrives if you pay in. The rules below follow GOV.UK and HMRC's Pensions Tax Manual, checked on 17 October 2026, for the tax year 6 April 2026 to 5 April 2027.

How the relief reaches you

If you pay into a personal or stakeholder pension, GOV.UK says it uses "relief at source": you pay in from your own money, and the pension provider claims tax relief from the government at the basic rate of 20% and adds it to your pot.

HMRC's manual gives the example: to get £100 into your pension, you pay £80 and the provider claims the other £20. The scheme must be registered with HMRC for any of this to apply, so check with the provider if you are unsure.

If you pay tax above 20%, the extra is not added to the pot. You claim it yourself, usually on your Self Assessment tax return, and it reduces your tax bill.

These rates apply in England, Wales and Northern Ireland.

It is not a business expense

Your own pension payments do not go in your business accounts. HMRC's self-employment notes say not to include "your own pension payments" in your staff costs. Pensions you pay for employees are a business cost, but yours are personal. They do not lower your trading profit, and HMRC's National Insurance manual says they do not lower your profits for Class 4 National Insurance either. The relief comes through the provider and your tax return instead.

The limits for 2026-27

• 100% of your earnings. If you are a UK resident under 75, you get relief on contributions up to your UK earnings taxed in the tax year, such as your trading profit and any wages, or £3,600 if that is higher. The limit counts the total going in, including the provider's top-up. HMRC can ask you to pay back relief above this limit.
• Low or no profit. If your earnings are under £3,600, or you have none, the provider can still claim 20% on up to £2,880 you pay in, making £3,600.
• The annual allowance. £60,000 for 2026-27, counting everything paid in by you or anyone else. Go over it and a tax charge applies, reported on your tax return.
• High incomes. The allowance is reduced if your threshold income is over £200,000 and your adjusted income is over £260,000, but not below £10,000.
• After taking money out. If you have flexibly accessed a pension, for example by taking cash from a flexi-access drawdown fund or a lump sum straight from an untouched pot, a lower money purchase annual allowance of £10,000 can apply.
• Carry forward. You can use unused annual allowance from the 3 previous tax years, earliest first, if you were in a registered pension scheme in those years.

Relief is given only for the tax year the payment is actually made. HMRC's manual says unused relief cannot be carried to another year, so a payment on 6 April 2027 counts for 2027-28, not 2026-27.

Worked example

Gary is a self-employed plumber living outside Scotland. His profit for 2026-27 is £58,000, he has no other income and he gets the standard £12,570 Personal Allowance. Income over £50,270 is taxed at 40%, so £7,730 of his profit is taxed at the higher rate.

He pays £4,000 into a personal pension.

All £5,000 sits within the £7,730 taxed at 40%, so the whole amount gets the extra 20%. If more than £7,730 had gone into his pension, counting the provider's top-up, there would be no extra relief on the part above it. His profit stays £58,000, so his Class 4 National Insurance does not change. Your own figures will differ.

If you live in Scotland

Scottish rates are different. The provider still adds 20%, even if your top rate is the 19% starter rate, and you do not pay the difference. On your tax return you can claim an extra 1% on income taxed at 21%, 22% on income taxed at 42%, 25% on income taxed at 45% and 28% on income taxed at 48%. In 2026-27 the Scottish 21% rate starts at £29,527 and the 42% rate at £43,663.

Steps to get the relief

1. Check the scheme is registered with HMRC and runs relief at source. The provider can tell you.
2. Give the provider your name, address, date of birth, National Insurance number and employment status, and make the declarations it asks for.
3. Keep a record of what you pay in during each tax year, 6 April to 5 April.
4. If any of your income is taxed above 20%, enter your contributions in the pension section of your tax return to claim the extra. HMRC's tax return guide says to enter the total: what you paid plus the 20% the provider added.
5. Keep your own pension payments out of your business expenses.
6. If you are near the £60,000 allowance, ask each provider for a statement and check the GOV.UK calculator for unused allowance.

What this means for you

Outside Scotland, if your profit stays within the 20% band, the provider's top-up is all the relief there is, and you do not have to claim anything. If a good year pushes your profit over £50,270, money paid in by 5 April can bring extra relief on that year's tax return. Pension payments are personal, so leave them out of your business expenses. Your State Pension is a separate matter that depends on your National Insurance record.

Use the free MTD check to see when Making Tax Digital starts for you, and the trades section for more guides on tax for tradespeople.