The pension annual allowance is £60,000 for 2026/27. What counts towards it, how carry forward works, the taper for high earners, and the MPAA.
If you have had a good year and you are thinking about putting a lump sum into your pension, the first question is usually the same one. How much can I actually pay in before HMRC stops adding tax relief? That limit is the pension annual allowance, and for the 2026/27 tax year it sits at £60,000 for most people.
The number matters because paying into a pension is one of the few genuinely generous things left in the UK tax system. Every pound you contribute gets topped up with tax relief at your highest rate. The relief only works up to the annual allowance though, and a handful of rules can quietly shrink that allowance without you noticing. Here is how it works, who the limit really affects, and how to use it properly.
In 2026/27 you can usually pay up to £60,000 into your pensions in a single tax year and still get tax relief, counting everything that goes in: your own contributions, your employer’s contributions, and the tax relief added on top.
That last point trips people up. The £60,000 is not just what leaves your bank account. It is the gross figure, so a basic-rate taxpayer who pays in £800 from their own pocket actually uses £1,000 of the allowance once the £200 of tax relief is included.
Pension tax relief gives you back the income tax you paid on the money before it went into the pension. A basic-rate taxpayer gets 20 per cent relief, so £80 becomes £100 inside the pot. A higher-rate taxpayer can claim back a further 20 per cent through their tax return or by asking HMRC, making the real cost of that £100 just £60. An additional-rate taxpayer can claim back more still.
The annual allowance caps how much of this you can do each year. Go over it and the excess is taxed through an annual allowance charge, which effectively claws back the relief you were not entitled to.
Worked example. Say you earn £80,000 and you want to make a one-off personal contribution to top up your workplace pension. Your employer and you already pay in £9,600 between you across the year. That leaves £50,400 of your £60,000 allowance unused. You pay in £20,000 of your own money. Basic-rate relief of £5,000 is added automatically, so £25,000 lands in the pension. As a higher-rate taxpayer you then claim back another £5,000 through your Self Assessment return. Your £20,000 contribution has cost you a net £15,000 and added £25,000 to your pot, and you are still comfortably inside the allowance.
There is a second limit sitting alongside the £60,000. Tax relief on your own contributions is capped at 100 per cent of your relevant UK earnings for the year, or £3,600 gross if you earn less than that. So someone earning £30,000 cannot get relief on a £50,000 personal contribution even though it is under the annual allowance, because it is more than they earned. Employer contributions are not limited by your earnings, only by the annual allowance.
If you have not used your full allowance in recent years, carry forward lets you mop up the unused amounts. You can go back three tax years, as long as you were a member of a registered pension scheme in each year you want to draw from, even if you paid nothing in.
The order is fixed. You use the current year’s £60,000 first, then the oldest available year, working forwards. In 2026/27 that means you could in theory pay in this year’s £60,000 plus unused allowance from 2023/24, 2024/25 and 2025/26. For many people that allows a six-figure contribution in a single year, which is useful after a bonus, a house sale, or an inheritance. Remember the earnings cap still applies to your own money, so carry forward is most powerful when a company is making the contributions.
A word of warning on carry forward: you cannot carry back. If you overshoot this year hoping to use next year’s allowance, that does not work. The allowance runs tax year by tax year, and once 5 April passes, any unused room from the year that has dropped off the back of the three-year window is gone for good. If you have a lumpy income, it pays to look at your last three years before the tax year ends rather than after.
If you are a high earner, your allowance can shrink. Two income tests decide whether the taper bites. Your threshold income needs to be over £200,000, and your adjusted income needs to be over £260,000. Adjusted income broadly includes your pension contributions, which is why it catches people who do not feel wealthy on paper.
Once both tests are met, the allowance falls by £1 for every £2 of adjusted income above £260,000. It keeps falling until it reaches the floor of £10,000, which happens at an adjusted income of £360,000 or more. So a senior manager on £280,000 of adjusted income would have an allowance of £50,000 rather than £60,000. If your income is anywhere near these levels it is worth getting the exact figures checked, because the definitions of threshold and adjusted income are fiddly.
There is one more trap. If you have already started taking money flexibly from a defined contribution pension, for example by drawing taxable income through drawdown, you trigger the money purchase annual allowance. That caps future contributions to those pots at £10,000 a year and switches off carry forward for them. Taking only your tax-free lump sum does not usually trigger it, but drawing taxable income does. If you are over 55 and still working while dipping into a pension, check this before you pay more in.
Your pension provider or scheme administrator can give you a pension savings statement showing how much has gone in. Employers must send one automatically if your contributions to that scheme go over £60,000, but it is worth asking even if they do not. Add up every pension you pay into, including any personal SIPP, and compare the total against your allowance for the year. The HMRC pension savings annual allowance checker can help you work out carry forward if your history is complicated.
The headline is that not much changed, which is good news if you are planning. The annual allowance stayed at £60,000, where it has been since April 2023. The minimum tapered allowance stayed at £10,000 and the money purchase annual allowance stayed at £10,000 too.
The bigger shift happened a couple of years earlier, when the lifetime allowance was abolished. There is no longer an overall cap on the total size of your pension for most people, though there are separate limits on tax-free lump sums. In practice that means the annual allowance is now the main thing to plan around each year.
If you want to see how a pension contribution changes your take-home pay and your tax, the NetPay app models income tax, National Insurance, and pension contributions together so you can see the real cost before you commit. Free to download.
See your real take-home pay in seconds
NetPay does this maths for every shift, invoice and payslip, automatically.
Download the app now
The standard pension annual allowance is £60,000 for the 2026/27 tax year. That is the most you can usually pay into all your pensions in one year and still get tax relief, counting your own contributions, your employer's contributions, and the tax relief added on top.
Yes. If you were a member of a pension scheme in the previous three tax years and did not use all your annual allowance, you can carry the unused amount forward. You must use the current year's allowance first, then the oldest of the three carry-forward years next.
High earners get a reduced allowance. If your threshold income is over £200,000 and your adjusted income is over £260,000, your allowance drops by £1 for every £2 over £260,000, down to a minimum of £10,000 once adjusted income reaches £360,000.
Yes. The £60,000 is a gross figure that counts everything paid into your pension in the year, including what your employer puts in and the basic-rate tax relief added to your own contributions, not just the cash that leaves your bank account.
Want to see your actual take-home pay?
NetPay UK works out your real net pay after tax, NI, pension and salary sacrifice, for hourly, shift and variable-income workers. Free to download.
Download the app now
A note on financial advice: NetPay UK calculates take-home pay based on official HMRC tax rules. This article reflects rules in force at the time of publication (25 September 2026). Tax rules change. For complex situations, consult a qualified UK accountant or visit gov.uk/income-tax.
