A children’s pension, personal pension, or someone else paying into your pension could all trigger extra tax relief payments of up to £720, experts have said.

UK households have been told they could be entitled to £720 in free pension cash. A children’s pension, personal pension, or someone else paying into your pension could all trigger extra tax relief payments of up to £720, experts have said.

Path Financial said 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, once again, they will be entitled up to £720 for free in tax relief from the Treasury.

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.

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“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.” A Junior SIPP is a tax-efficient way to start building a nest egg for your child or grandchild. Only a parent or guardian can open the pension but anyone can contribute. Control of the pension passes to the child when they reach age 18.

Children’s pensions benefit from the same advantages as adult pensions. That means no tax is payable on income from investments or capital growth in the pension, provided they remain within the Annual Allowance and Lifetime Allowances.

As the name suggests, you can choose the investments that go inside the pension. You can invest an annual lump sum, or spread contributions across the year by investing a smaller amount each month.