HM Revenue and Customs (HMRC) has confirmed a tax charge that applies to older pensioners once they reach the age of 75. Under HMRC rules, tax relief on individual pension contributions ceases at this age, meaning the government no longer adds basic-rate tax relief to contributions made after the 75th birthday.
What Changes at Age 75?
Before turning 75, individuals can receive tax relief on private pension contributions worth up to 100% of their annual earnings. This relief is typically applied automatically, though in some cases individuals may need to claim it themselves depending on their pension scheme and Income Tax rate. However, after age 75, contributions are no longer eligible for tax relief.
An annual allowance limits the amount that can be paid into a pension scheme each year before Income Tax is due. For the 2026/27 tax year, the maximum is £60,000 per year, but this only applies to UK residents under 75. For those still working at 75, the government will not add basic-rate tax relief on any contributions made from that point onward.
While pension contributions can still be made after age 75 if the provider accepts them, the right to tax relief is lost. HMRC's guidance on pensions tax states: “Although contributions can be paid after a member has reached the age of 75, they are not relievable pension contributions and cannot qualify for tax relief.”
Impact on Death Benefits
Turning 75 also affects pension death benefits. If a pension holder dies before age 75, beneficiaries typically receive the benefits free from Income Tax. However, if death occurs after age 75, beneficiaries must pay Income Tax on the benefits at their marginal rate. This can significantly reduce the amount left to family members.
Oliver Griffin from Fidelity UK explained: “Once you turn 75, you no longer receive tax relief on personal pension contributions. For that reason, many pension schemes don’t accept new contributions after this. If you happen to be working at 75, your employer can still pay into your pension - provided these contributions meet tax rules.”
He added: “Age 75 is also important for death benefits. If someone dies under the age of 75, their beneficiaries do not, at the moment, generally have to pay income tax or inheritance tax (IHT) on inherited pension wealth. If someone dies aged 75 or over, beneficiaries normally pay income tax on money they receive from the pension but, currently, they do not usually pay IHT on that. However, from April 6, 2027, unused pension funds and certain death benefits will be included in the deceased's estate for IHT purposes.”
Tax-Free Cash After 75
Once an individual turns 75, they should still be able to take their pension’s tax-free cash, but the rules can become more complicated and potentially less favourable. Some pension providers may not allow tax-free cash to be taken after this age.
Given the loss of tax relief on personal contributions and the changes to death benefits, planning for the age 75 milestone is particularly important. Pensioners are advised to review their pension arrangements ahead of their 75th birthday to understand the implications and consider any necessary adjustments.
