The annual allowance is the most that can go into your pensions in a tax year with tax relief: £60,000 in 2026/27, counting your own contributions, tax relief and anything your employer pays. Unused allowance from the previous three years can be carried forward. For the highest earners the allowance tapers by £1 for every £2 of adjusted income above £260,000, down to £10,000 at £360,000, and anyone who has flexibly accessed a pension is limited to £10,000 of defined contribution saving. Exceeding the allowance does not stop the contribution; it triggers a tax charge that claws back the relief.
The limits
| 2026/27 | |
|---|---|
| Standard annual allowance | £60,000 |
| Tapered allowance | reduced by £1 for every £2 of adjusted income over £260,000 |
| Taper applies only if threshold income also exceeds | £200,000 |
| Minimum tapered allowance | £10,000, reached at £360,000 adjusted income |
| Money purchase annual allowance after flexible access | £10,000 |
| Carry forward | unused allowance from the three previous tax years |
| Relief limit on personal contributions | 100% of relevant UK earnings, or £3,600 gross without earnings |
The allowance measures the pension input amount across all your schemes: for a defined contribution pension, every payment in during the tax year including basic rate relief added by the provider and employer contributions; for a defined benefit scheme, the growth in the promised pension over the year multiplied by 16, plus any separate lump sum growth. The State Pension does not count. The annual allowance calculator works the tapered figure and any excess from your income and contributions.
Threshold income and adjusted income
The taper uses two measures. Threshold income is broadly total taxable income less your own pension contributions made gross; adjusted income adds back all pension contributions including the employer’s. The taper only applies when threshold income exceeds £200,000 and adjusted income exceeds £260,000, which means a large personal contribution can take someone below £200,000 of threshold income and switch the taper off.
| Threshold income | Adjusted income | Annual allowance | Excess on a £60,000 contribution |
|---|---|---|---|
| £150,000 | £180,000 | £60,000 | £0 |
| £210,000 | £250,000 | £60,000 | £0 |
| £190,000 | £300,000 | £60,000 | £0 |
| £220,000 | £280,000 | £50,000 | £10,000 |
| £250,000 | £300,000 | £40,000 | £20,000 |
| £300,000 | £360,000 | £10,000 | £50,000 |
| £400,000 | £450,000 | £10,000 | £50,000 |
The third row shows the threshold income test at work: adjusted income of £300,000 would taper the allowance to £40,000, but threshold income below £200,000 keeps the full £60,000.
Carry forward
Unused allowance from 2023/24, 2024/25 and 2025/26 can be added to this year’s, provided you were a member of a registered pension scheme in those years. The allowance was £60,000 in each of them, so someone who paid in £30,000 a year for three years has £90,000 unused to bring forward and could contribute £150,000 in 2026/27 without a charge, subject to the earnings limit on personal contributions. The current year’s allowance is used first, then the earliest year’s. Carry forward is not available against the money purchase allowance once it applies.
The tax charge
Contributions above the available allowance are added to taxable income and charged at your marginal rate, which recovers the relief given. A higher rate taxpayer who exceeds the allowance by £20,000 owes £8,000 and reports it on a Self Assessment return. Where the charge exceeds £2,000 and the excess arose in one scheme, that scheme can be asked to pay the charge from the pension fund under the scheme pays arrangement. Employer contributions above the allowance still attract corporation tax relief for the employer; the charge falls on the member.
The money purchase annual allowance
Taking taxable income from a defined contribution pension, through drawdown income or an uncrystallised funds lump sum, triggers the money purchase annual allowance of £10,000 for all future defined contribution saving, permanently and without carry forward. Taking only the 25% tax-free cash, buying a lifetime annuity or drawing a defined benefit pension does not trigger it. People who plan to keep working and contributing after 55 should take the tax-free element or an annuity rather than drawdown income until they have finished saving.
How this fits with ordinary saving
Few people approach the allowance. A 10% total contribution on a £50,000 salary is £5,000 a year, and even a full 40% higher rate contribution on £100,000 sits well within it. The allowance matters for high earners, for people making large one-off contributions such as a redundancy payment or an inheritance, and for long-serving members of generous defined benefit schemes whose pension input amount can exceed £60,000 in a year of promotion. Our guide to how much to pay into a pension covers the ordinary case, and the pension tax relief calculator shows what a contribution costs at each tax rate.
Common questions
What is the pension annual allowance for 2026/27? £60,000, including employer contributions and tax relief, tapering to as little as £10,000 for people with adjusted income above £260,000 and threshold income above £200,000.
Can I pay in more than £60,000? Yes, using unused allowance from the previous three tax years through carry forward, and provided personal contributions do not exceed your earnings for the year. Anything above the available total is subject to the annual allowance charge.
What is the tapered annual allowance? A reduction of £1 for every £2 of adjusted income over £260,000, reaching the £10,000 floor at £360,000. It applies only when threshold income is also above £200,000.
What happens if I exceed the allowance? The excess is taxed at your marginal rate through Self Assessment. Charges over £2,000 can be paid from the pension scheme under scheme pays.
What is the money purchase annual allowance? A £10,000 limit on defined contribution saving that applies once you have taken taxable income flexibly from a pension. It has no carry forward and cannot be reversed.
Does the State Pension count towards the allowance? No. Only registered pension schemes count: workplace pensions, personal pensions, SIPPs and defined benefit schemes.
Information, not financial advice. Limits are the published 2026/27 figures on gov.uk: tax on your private pension contributions; worked figures are from the site’s calculator for straightforward cases. Pension input amounts for defined benefit schemes come from the scheme’s statement, so take advice before acting on them.