Tax savings

One reason you might choose to save for your retirement with an AVC plan, alongside your main scheme pension, is the tax savings AVC contributions offer.

AVCs are taken from your pay before tax, so the money you’d normally pay as income tax will automatically go into your AVC pot instead, as you can see below. If you pay tax at a higher rate, your tax savings will be higher. If you don't pay tax, you won't benefit from tax savings.

Income tax on pension savings

The total amount of tax relief you get on your pension savings is limited so make sure you're aware of the 'Important information about pensions allowances'. The UK Government may change these allowances from time to time so check their website to see any changes which may impact you. If you think you might be affected, you can get more information from the HM Revenue & Customs website.

If you're a member of a Salary Sacrifice arrangement, please speak to your employer about how this may affect you.

Tax savings will depend on your individual circumstances and rules can also change.

Your rate of income tax

As your contributions, including any paid by Salary Sacrifice, are deducted from your earnings before your tax bill is worked out, the amount of income tax you pay will be based on what’s left.

If you're a Scottish taxpayer, you’ll pay tax based on the Scottish rate of income tax and tax bands. For more information on Scottish income tax, visit

If you're a Welsh taxpayer, you’ll pay tax based on the Welsh rate of income tax and tax bands. For more information on Welsh income tax, visit


More information

Your AVCs

Your AVCs pot could provide you with extra in retirement.

Flexible contributions

Change your contributions to suit your needs and circumstances.

Changing your investment

Check your investment choice online and switch whenever you want to.

Flexible ways to take your money

You have a number of options for taking your money.

Trusted provider partnership

Prudential is an appointed AVC provider to 72 of 99 Administering Authorities within the LGPS.