How to Calculate Income Tax Relief

Tax relief is available for individuals in the United Kingdom who claim income and pay a certain percentage of their wages toward pension. The amount of available tax relief can be calculated after determining gross income, percentage of pension that is paid from your check and your tax group.

1. Determine the amount of your gross monthly income. You can find this amount on your pay stub, or you can use the figures on your W2 form to calculate the amount.


2. Find the amount of money that is being placed in your pension or 401(k). This amount will be located near other withholding on the pay stub. It should be labeled clearly.


3. Determine which tax group you fit into. If you make less than £37,400, you are taxed 20 percent. If you make between £37,401 and £150,000, you are taxed 40 percent. If your gross income is more than £150,001, you will be taxed 50 percent. If you have more than one income, you may be in more than one tax group.


4. Divide your taxed income by your monthly or weekly income. This will tell you how many months or weeks it will take you to make the full taxable income.


5. Multiply the amount of money that is paid toward your pension by the number of months or weeks it takes you to reach your full taxable income amount. Determine the percentage paid toward your pension. The remaining amount will be your total amount of tax relief.