Previously on our blog, our Principal Accountant, Victoria Cooper, looked at how limited company directors can use pension contributions to reduce their Corporation Tax bill. Now, as the second in our National Pension Awareness Week mini series, Victoria looks at sole traders, because the rules work differently and it's worth checking you're getting the relief you're actually entitled to.

How the relief works

When you pay into a personal pension as a sole trader, basic rate tax relief (20%) is usually added automatically by your pension provider, so a £80 contribution becomes £100 in your pot.

If you pay higher or additional rate tax, that's only the first part. The extra relief, taking you up to 40% or 45%, has to be claimed separately through your self-assessment tax return. It doesn't happen on its own.

Where people miss out

This is the bit that catches people out. If you're a higher rate taxpayer and you haven't been declaring your pension contributions on your tax return, you could be leaving a meaningful amount of relief unclaimed each year, and it isn't backdated automatically if you forget.

What to check

• Are you declaring pension contributions on your self-assessment return?
• Are you claiming the right rate of relief based on your income for the year?
• Do you know how much of your annual allowance (£60,000 for 2026/27) you've used?

This isn't financial advice, but if you're not sure whether you're claiming everything you're due, it's worth a quick check with us before your next return is due.