Key thresholds
Annual allowance: £60,000 (or 100% of annual earnings if lower). Basic rate tax relief (20%) added automatically by provider. Higher rate relief (additional 20-25%) claimed via Self Assessment.
Common questions
Can I put my pension contributions through my business accounts?
No. As a sole trader you cannot pay into a pension as a business expense. Contributions come from your personal income after tax. The tax relief comes back through your pension provider and Self Assessment, not through reduced business profits.
Do I get any tax relief on pension contributions as a sole trader?
Yes, but not as a business expense. Your pension provider claims basic rate (20%) relief from HMRC and adds it to your pot. If you pay 40% tax, you claim the additional 20% relief on your Self Assessment return.
How much can I contribute to my pension each year?
Up to £60,000 per tax year, or 100% of your earnings, whichever is lower. This includes the tax relief amount, not just what you personally pay in.
Watch out for
—The annual allowance can be lower if you have flexibly accessed your pension or have a high income (the allowance tapers down for very high earners).
—Unused annual allowance from the previous three tax years can be carried forward.
—If you also have employment income, all pension contributions across all schemes count towards the one annual allowance.
Pension rules are complex. The annual allowance and taper rules can create unexpected tax charges. Take advice if contributing large amounts.
HMRC sources
Last verified: May 2026 · Tax year 2026/27