The Standard Allowance
The pension annual allowance for 2026/27 is £60,000. This is the maximum you can contribute to all your pensions in a single tax year while still receiving tax relief. It includes your personal contributions, employer contributions, and any tax relief added by HMRC.
Carry Forward
If you did not use your full allowance in the previous three tax years, you can carry the unused amount forward. This means you could potentially contribute well above £60,000 in a single year.
- You must have been a member of a registered pension scheme in each carry forward year.
- Use the oldest year’s unused allowance first.
- You must use the current year’s £60,000 allowance before dipping into carry forward.
Tapered Annual Allowance
If your adjusted income exceeds £260,000, your annual allowance is reduced by £1 for every £2 over that threshold. The minimum tapered allowance is £10,000.
| Adjusted Income | Annual Allowance |
|---|---|
| Up to £260,000 | £60,000 |
| £300,000 | £40,000 |
| £360,000 or above | £10,000 |
The taper only applies if your threshold income also exceeds £200,000.
Money Purchase Annual Allowance
If you have flexibly accessed your defined contribution pension (for example, through flexi-access drawdown or taking an uncrystallised funds pension lump sum), your allowance for further money purchase contributions drops to £10,000. This is the Money Purchase Annual Allowance.
- Taking your 25% tax-free lump sum alone does not trigger the Money Purchase Annual Allowance.
- Carry forward cannot be used for the Money Purchase Annual Allowance — it is a hard £10,000 limit.
- Once triggered, the Money Purchase Annual Allowance applies for the rest of your life.
What Happens If You Exceed the Allowance
Contributions above your annual allowance are subject to an annual allowance charge. The excess is added to your income for the year and taxed at your marginal rate. If the charge exceeds £2,000, you can ask your pension scheme to pay it from your pension pot (known as scheme pays).