Pension contributions

How much can I pay into my pension?

There's no limit on how much you can pay into your pension each year, however, there is a limit to the total contributions (including tax relief) you can make before you have to pay a tax charge.

It's important to understand how the annual allowance applies to you because you may have to pay tax if you exceed it.

What is the annual allowance?

For the 2025/26 tax year, the annual allowance for most people is £60,000.

This means that if you’re a UK taxpayer under the age of 75, you’re able to get tax relief on pension contributions up to 100% of your earnings, or up to the annual allowance – whichever is the lower of the two.

If you’re not working or not earning enough to pay income tax, you can still receive tax relief on contributions up to £3,600 each year – £2,880 of your money and £720 in tax relief. 

It’s important to remember that the annual allowance includes contributions made by you, your employer, or anyone else contributing to your pension. It also includes any government tax relief, so make sure you factor this into your calculations. It applies across all the pensions you may have – it is not a ‘per pension pot limit’.

Also, transferring a pension during the tax year won’t reduce your annual allowance.

If you have questions about how the pension allowance impacts you, book a free call with our team of experts. 

What happens if I exceed the annual allowance?

You may have to pay tax on the excess contributions to your pension. This is not a fixed amount, as it depends on your taxable income and your excess pension contributions. It may also depend on whether you have any unused annual allowance from the previous three tax years. We cover this in more detail under 'Can I carry forward any unused annual allowance?' below. 

Are there any exceptions?

Yes, there are exceptions to the annual allowance rules. Your annual allowance may be reduced on a tapering scale if your  'threshold income' is over £200,000 and your ‘adjusted income’ is over £260,000 per year.

Your 'adjusted income' includes all pension contributions (including any employer contributions), while 'threshold income' excludes pension contributions.

Your annual allowance is reduced by £1 for every £2 of adjusted income you have above £260,000, with the minimum tapered allowance being £10,000, regardless of your income.

If you've flexibly accessed your pension, your annual allowance will usually reduce to £10,000.

Can I carry forward any unused annual allowance?

Yes, the 'carry forward' rule allows you to apply any unused allowance over from the previous three tax years and benefit from tax relief, as long as you were a member of a pension scheme during those years. This may be particularly helpful if you’re self-employed, your earnings fluctuate each year, or if you’re looking to make very large pension contributions.

Before you can carry your unused allowance forward, you must first make the maximum allowable contribution in the current tax year. You can then use any unused annual allowances from the three previous tax years.

It’s important to remember that you can't receive tax relief on contributions that exceed your earnings in a tax year. Also, you’ll only receive higher or additional rate tax relief if you’ve paid the higher or additional rate of tax.

If you have questions about carrying forward any of your unused annual allowance, book a free call with our team of experts.