Annual Allowance
The maximum amount you can contribute to pensions each tax year while still receiving tax relief.
The annual allowance is the limit on how much you can pay into pensions in a single tax year and still receive tax relief. For the 2025/26 tax year, the standard annual allowance is £60,000. This covers the total of your own contributions, any employer contributions, and the tax relief added by the government. If you exceed the annual allowance, you will face a tax charge on the amount over the limit, known as the annual allowance charge.
There are some important variations. If you have already started flexibly accessing a defined contribution pension (for example through drawdown), your allowance for further contributions to defined contribution schemes is reduced to £10,000 under the money purchase annual allowance (MPAA). High earners may also be affected by the tapered annual allowance, which reduces the £60,000 limit for individuals with adjusted income above £260,000, down to a minimum of £10,000.
If you have not used your full annual allowance in the current tax year, you may be able to carry forward unused allowance from the previous three tax years, provided you were a member of a registered pension scheme during those years. This can be particularly useful if you receive a bonus or lump sum and want to make a large one-off pension contribution. Understanding your annual allowance is essential to avoid unexpected tax charges.