People can get free £720 pension boost every year with little-known tax trick

Householders worried about their retirement income could get a free boost of up to £720 a year, finance experts have explained. Millions of people across the UK could be entitled to the extra cash if they use some little-known tax hacks.

Path Financial says adding to your personal pension or children's pension, or even someone else paying into your pension, could all trigger extra tax relief payments of up to £720 – boosting your nest egg but costing you nothing extra.

Putting up to £2,880 a year in your own pension can trigger up to £720 in tax relief payments from the Treasury. Similarly, for parents who are interested in boosting their kids' pension pots before they reach adulthood, if they pay in up to £2,880 a year, the Treasury will add up to £720 for free in tax relief.

And if someone has a pension and their partner, friend, relative or anybody else contributes up to £2,880 a year, the same tax relief applies.

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Rowan Harding, financial planner at Path Financial, said: "Essentially, if you put £2,880 in your pension pot in one year, you will be entitled to £720 in tax relief from the Government. This money can be accrued yourself, through friends or relatives contributing to your pot or for children, if their parents, guardians or those close to them contribute too.

"You can contribute using one of these ways or more, but you can't get more than the £720 tax relief you're entitled to. These three ways could prove lucrative in your old age if you start using them early because the more money you build up, the more you'll have to spend when you reach retirement."

Many people believe their State Pension alone won't be enough to live on. In April 2025, the full New State Pension will rise from £221.20 to £230.25 a week, providing an extra £470 a year. The full basic State Pension will increase from £169.50 to £176.45 per week, worth an extra £360 annually.

For those with maximum entitlement through National Insurance contributions, the full yearly amounts will be £9,175.40 for the Basic State Pension and £11,973 for the New State Pension.

However, the Retirement Living Standards website says that a single person needs £14,400 a year and a couple £22,400 just to have a minimum lifestyle with one UK-based, one-week holiday and no car. For a moderate lifestyle, with a car and two weeks abroad in the Mediterranean, a single person would need £31,300 a year and a couple would need £43,100.

Meanwhile, a comfortable lifestyle would require £43,100 a year if you're single and £59,000 for a couple which would allow changing the car every five years and having one overseas holiday and several weekend breaks.

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