Tax Relief One of the most important benefits of saving into a pension is tax relief. When you make personal pension contributions you  normally receive tax relief at your marginal income tax rate; 20% for basic rate taxpayers, 40% for higher rate and additional rate taxpayers can receive huge 45% tax relief on their personal pension contributions (a £100 personal contribution only really costs £55). Basic rate tax relief is usually paid directly into your pension pot by HMRC, higher and additional tax relief can be claimed via a self-assessment or by contacting HMRC.​ ​ If you own and run a limited company you can also make contributions as an allowable business expense to your company. So rather than receiving personal tax relief you are saving on corporation and income tax that you would have paid to yourself. ​ Taxation in Retirement You are entitled to take 25% of your pension tax-free, in a lump sum or as a proportion of regular income, which means 75% is taxable at your marginal rate in the same way as earned income (like a salary). The tax implications of pension withdrawals will be based on your individual circumstances. ​ Annual Allowance & Lifetime Allowance There is a limit on the total amount you can save into a pension, called a Lifetime Allowance, going over this limit can result in a significant tax charge. The current Lifetime Allowance is £1,073,100 however you may have a different allowance depending on when you retired or crystallised your pension benefits. Similarly there is an annual allowance of £60,000 p.a. which is the maximum you can pay into your pensions without incurring a potential tax charge (including defined benefit benefits still being accrued), tax relievable contributions are limited to net relevant earnings. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts and their value depends on the individual circumstances of the investor.