Can I Get Higher Rate Relief If I Pay Into Someone Else’s Pension

Introduction

You can pay into someone else’s pension, such as a spouse’s, partner’s, or child’s plan, but the rules on tax relief are specific. Tax relief is designed to encourage individuals to save for their own retirement, so it normally applies to the person who owns the pension, not the person making the payment.

In other words, if you pay into another person’s pension, the tax relief is added to their pension, not yours. However, there are situations where contributing on behalf of someone else can still make financial sense.

How pension tax relief works

Pension tax relief is based on an individual’s own earnings and tax position. When someone contributes to their pension, they receive tax relief equal to the amount of Income Tax they have paid on that income.

Most personal and stakeholder pensions operate under the relief at source system. This means the pension provider automatically adds 20 percent basic rate relief to contributions. For example:

You pay £80 into the pension.

The provider claims £20 from HMRC.

The total contribution added to the pension is £100.

If the person paying into the pension is a higher or additional rate taxpayer, they can claim extra relief from HMRC through Self Assessment or by adjusting their tax code.

Paying into someone else’s pension

You can make contributions into another person’s pension account, but the tax treatment depends on whose name the pension is in.

If you pay into a pension in someone else’s name, such as your spouse or child, it is classed as their contribution, not yours.

The tax relief will be based on their earnings and tax position.

They will receive the 20 percent basic rate top-up from HMRC, even if the contribution was made using your money.

You cannot personally claim higher rate relief on that contribution, because the pension belongs to them.

For example:
If you pay £800 into your spouse’s personal pension, the provider will claim £200 in basic rate relief, bringing the total to £1,000. The tax relief belongs to your spouse, not you, even though you provided the funds.

What if the person you pay for has little or no income

Even if the pension owner has no taxable income, they can still receive basic rate tax relief on up to £2,880 per tax year of contributions. HMRC will add 20 percent (£720), bringing the total to £3,600.

This rule allows non-working spouses, partners, or even children to benefit from pension saving. However, higher or additional rate relief does not apply because the recipient does not pay higher rate tax.

When you can claim higher rate relief

You can only claim higher rate pension relief if:

The pension is in your name.

You pay into it using your own income.

You are a higher or additional rate taxpayer.

In that case, you can claim the additional tax relief (above the 20 percent automatically added) via your Self Assessment tax return or by contacting HMRC.

If the contribution is paid into someone else’s pension, you cannot claim higher rate relief, even if you funded the payment from your income.

Alternative ways to support someone else’s pension

Although you cannot claim higher rate relief on someone else’s pension, there are legitimate ways to help another person build their retirement savings:

Make a third-party contribution: You can pay directly into their pension. The contribution counts as theirs, so they receive tax relief up to the annual limit.

Gift them money: You can give them the funds, and they make the pension contribution themselves. This may be simpler, as the tax relief will still be applied to their account.

Employer contributions: If you own a business, you may be able to contribute to a spouse’s or family member’s pension if they are an employee of your company. These payments are treated as an allowable business expense, provided they are genuine remuneration.

Annual allowance considerations

All pension contributions made on behalf of an individual count towards their annual allowance, which is currently £60,000 per tax year (or 100 percent of their earnings, whichever is lower).

If the person you are contributing for has no income, the maximum contribution eligible for tax relief is £3,600 gross (£2,880 net). Contributions above this amount will not receive tax relief but can still be made.

You cannot use your own unused allowance to increase another person’s pension limit. Carry-forward rules apply only to your own pension.

Example scenario

John is a higher rate taxpayer earning £80,000 a year. His wife, Sarah, stays at home and has no taxable income. John decides to pay £2,880 into Sarah’s personal pension each year.

Sarah’s pension provider claims £720 basic rate relief from HMRC.

The total contribution added to her pension is £3,600.

John cannot claim higher rate tax relief on the payment because it is not his pension.

However, the contribution still benefits the couple overall by helping Sarah save for retirement with the added government top-up.

Common mistakes to avoid

Assuming that the person making the payment receives the tax relief rather than the pension holder.

Paying in more than £2,880 for someone with no income and expecting all of it to attract tax relief.

Forgetting that you can only claim higher rate relief on your own pension contributions.

Not keeping records of payments made on behalf of another person for financial planning or inheritance tax purposes.

Inheritance tax benefits

Contributing to someone else’s pension can also be a useful inheritance tax strategy. Pension contributions made from regular income or within annual gifting limits are usually exempt from inheritance tax. This allows you to support a loved one’s retirement savings while reducing your taxable estate.

Conclusion

You cannot claim higher rate pension tax relief when paying into someone else’s pension because tax relief is based on the pension holder’s earnings, not the contributor’s. The recipient receives any applicable relief, including the basic 20 percent top-up.

If you want to maximise your own tax benefits, contribute to your own pension and claim any higher rate relief you are entitled to. However, helping a partner or child with their pension can still be a valuable financial decision, as they will benefit from government tax relief and long-term savings growth.