Annual allowance (pension)

The annual allowance is the limit on pension savings across all your registered pension schemes in a tax year (6 April to 5 April) before you pay a tax charge. According to HMRC's pension schemes rates (updated 6 April 2026), it is £60,000 for 2026/27, unchanged since 2024/25. It counts everything paid into defined contribution pensions by you, your employer or anyone else, plus the growth in any defined benefit pension.

• Carry forward: according to GOV.UK, you can use unused allowance from the previous 3 tax years, as long as you were a member of a registered pension scheme in each of those years.
• Taper: if your threshold income is over £200,000 and your adjusted income is over £260,000, the allowance falls by £1 for every £2 above £260,000, down to a minimum of £10,000.
• Money purchase annual allowance: once you flexibly access a pension pot, the limit on further defined contribution savings drops to £10,000.

Tax relief on your own contributions is separately capped at 100% of your earnings, so a low earner cannot get relief on £60,000.

Example: with threshold income of £240,000 and adjusted income of £300,000, you are £40,000 over the £260,000 limit, so your allowance falls by £20,000 to £40,000. If you and your employer pay in £50,000, the £10,000 excess is added to your income and taxed at your marginal tax rate, unless unused allowance carried forward covers it. You report the charge in the pension savings tax charges section of a Self Assessment return.

See what a contribution does to your pay in the UK take-home pay calculator, and read how pension tax relief works.