Bureau of Wealth

ISA vs Pension Calculator

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Put the same amount from your take-home pay into an ISA and a pension, and see which leaves you with more after tax relief now and income tax later.

Using 2026/27 rates rates checked 14 September 2026

Scottish taxpayers have different bands.

The same cost to you in both. In a pension, tax relief tops it up.

Check the highlighted fields to see your results.

What this calculator assumes

  • Income tax uses the 2026/27 bands and Personal Allowance published on GOV.UK, for England, Wales and Northern Ireland or for Scotland.
  • The pension is a personal or workplace pension with relief at source: 20% is added to what you pay, and higher or additional rate taxpayers claim the rest. Tax relief is worked out as the income tax your contribution actually saves, and never less than the 20% added at source.
  • It does not include employer contributions, National Insurance or salary sacrifice, and it ignores the pension annual allowance except to warn when a contribution would go over £60,000.
  • In retirement, 25% of the pension is taken tax-free, up to the £268,275 lump sum allowance, and the rest is taxed at the single rate you choose. In reality your rate depends on your total income each year.
  • Both accounts grow at the same yearly rate after charges, and tax rules stay as they are today.

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How the comparison works

The fair way to compare an ISA and a pension is to start from the same cost to you. The calculator takes the amount you would save each month from your take-home pay. In an ISA, that is exactly what goes in. In a pension, tax relief tops it up, so more goes in for the same cost.

To find the pension contribution, the calculator works out your income tax on your salary using the 2026/27 bands, then finds the gross contribution whose cost to you after relief equals your monthly amount. Both pots grow at the same rate. At the end, the ISA is yours tax-free. From the pension, a quarter is tax-free and the rest is taxed at the rate you expect to pay in retirement.

A worked example

A basic rate taxpayer earning £30,000 in England saves £80 a month. In a pension that becomes £100, because £20 of tax relief is added, so £1,200 goes in over a year for a cost of £960. With no growth, the ISA holds £960 at the end of the year. The pension holds £1,200, of which £300 is tax-free and £900 is taxed at 20%, leaving £1,020 after tax, £60 more than the ISA.

Change the retirement tax rate to 40% and the result flips: the pension leaves £840 after tax, £120 less than the ISA. Over 25 years at 5% growth, the same £80 a month grows to about £46,859 in an ISA and £49,787 after tax in a pension, still at a 20% rate in retirement.

Why your tax band matters

Relief is worth more the higher your rate. A higher rate taxpayer earning £60,000 who pays £80 a month from take-home pay gets £1,600 a year into a pension, because 40% relief applies, and keeps £1,360 after tax in the no-growth example against £960 in an ISA. In Scotland, higher rate taxpayers get 42% relief.

Relief can be worth even more between £100,000 and £125,140, where the Personal Allowance is reduced by £1 for every £2 of income. A £10,000 gross contribution from a £110,000 salary saves £6,000 of income tax, an effective 60%, because it restores part of the allowance.

What the numbers leave out

A pension usually cannot be touched until your mid to late 50s, while an ISA can be used at any time, which matters if you might need the money sooner. Employer contributions, if your employer pays them, can make a pension far more valuable than this comparison shows. The retirement tax rate is also a guess, so try each option to see how much the answer depends on it.

If you decide on an ISA, the ISA allowance calculator shows how much of this year's £20,000 you have left.

Frequently asked questions

Is a pension always better than an ISA?

Not always. A pension usually wins when the tax relief you get now is higher than the tax you pay when you draw it, helped by the 25% tax-free part. An ISA can come out ahead if you expect a higher tax rate in retirement or need access to the money earlier.

How does pension tax relief work?

With relief at source, your pension provider claims 20% from the government and adds it to your pot. Higher and additional rate taxpayers can claim extra relief through Self Assessment, and Scottish taxpayers claim at their own higher rates.

How much can I take from a pension tax-free?

You can usually take up to 25% of the amount built up in a pension as a tax-free lump sum. GOV.UK says the most you can take is £268,275.

Is there a limit on pension contributions?

You get tax relief on contributions worth up to 100% of your annual earnings. The annual allowance, the most you can save across your pensions in a tax year before paying tax, is £60,000, and you may be able to carry forward unused allowance from the previous three tax years.

Why does the calculator ask where I pay income tax?

Scotland has different income tax bands and rates, including 19%, 21%, 42%, 45% and 48% rates. That changes both the tax relief on a pension contribution and the tax you pay now.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.