Chris

I'm trying to understand the workings of how higher rate tax relief on pension contributions where tax relief at source in place. Assuming pension contributions of £6,000 paid after income tax at 40%, it took £10,000 gross to be paid £6,000 net after income tax. £6,000 is paid into the pension provider, they gross this up with basic tax relief at 20%, Which means an additional £1,500 is claimed back and added to pension fund. When you claim higher rate tax relief you get an additional 20%, which is another £1,500 £6,000 + £1,500 + £1,500 = £9,000 This is an effective 33% tax relief rather than 40%. Have I misunderstood this somewhere?