The standard annual allowance
The standard pension annual allowance is £60,000 for 2026/27. It generally limits the pension saving that can receive tax relief across all your private pensions in the tax year. An annual allowance tax charge may apply if total pension input exceeds the allowance available to you.
What counts towards it?
For defined contribution pensions, pension input normally includes contributions by you and your employer. A pension contribution funded through pension salary sacrifice is made by the employer, so it counts alongside ordinary employer contributions, matching and any employer National Insurance saving added to the pension.
Defined benefit schemes use the increase in the value of promised benefits rather than the amount contributed. TaxOptions does not calculate defined benefit pension growth.
The tapered annual allowance
High earners may have a reduced annual allowance. For 2026/27, tapering can apply when threshold income is over £200,000 and adjusted income is over £260,000. Adjusted income for this test can add employer pension contributions back in, including contributions made through salary sacrifice.
Salary sacrifice does not automatically avoid the tapered annual allowance. The definitions and timing rules are different from the adjusted net income test used for the Personal Allowance.
Carry-forward
You may be able to use unused annual allowance from the previous three tax years if you were a member of a registered pension scheme in those years. The current year's allowance is used first, then unused allowance is normally used from the earliest available year.
Carry-forward does not create earnings for personal contribution tax relief, and it cannot increase the Money Purchase Annual Allowance. Check the historical figures before relying on it.
If you have flexibly accessed a defined contribution pension, the Money Purchase Annual Allowance may limit tax-relieved money purchase pension input to £10,000 for 2026/27. Unused MPAA cannot be carried forward. Common triggers include taking taxable income through flexi-access drawdown or an uncrystallised funds pension lump sum, while taking only tax-free cash does not usually trigger it.
TaxOptions does not determine whether you have triggered the MPAA. Confirm this with your pension provider before making a large contribution.
If you exceed your available allowance
An annual allowance tax charge can claw back the tax relief on the excess. You may need to report it through Self Assessment. In some circumstances your pension scheme may be able or required to pay the charge from your benefits under scheme pays rules.
Exceeding the allowance does not usually mean the pension contribution itself is rejected, but the tax charge can materially change the benefit of making it.
Figures to gather
- Contributions already paid into every defined contribution pension this tax year.
- Ordinary employer contributions, matching and expected contributions for the rest of the year.
- Pension input statements for any defined benefit scheme.
- Unused annual allowance from the previous three tax years.
- Whether you have flexibly accessed a pension and triggered the MPAA.
- Income figures needed to test the tapered annual allowance.
Official sources
- GOV.UK: Pension annual allowance
- GOV.UK: Work out your tapered annual allowance
- HMRC manual: Money Purchase Annual Allowance triggers
Estimate your pension input
Compare a selected pension salary sacrifice level with the annual allowance information you enter.
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