The pension annual allowance is the maximum pension saving you can usually build up in a tax year with tax relief before an annual allowance tax charge may apply.
Pension annual allowance in plain English
The pension annual allowance is a tax limit. It controls how much can be paid into your pension, or built up in a defined benefit pension, before an extra tax charge may apply.
For 2026/27, the standard annual allowance is £60,000. For defined contribution pensions, this usually includes your own pension contributions, employer contributions and any tax relief added to the pension.
If you go over the annual allowance, you do not automatically lose the contribution, but you may have to pay an annual allowance charge. Some people can reduce or remove the charge by using unused pension allowance carried forward from previous tax years.
The allowance can be lower for some people. High earners may have a tapered annual allowance, and people who have flexibly accessed taxable defined contribution pension money may be affected by the Money Purchase Annual Allowance.
The pension annual allowance is different from the ISA allowance. The ISA allowance controls how much you can pay into ISAs. The pension annual allowance controls tax-relieved pension saving.
Calculate pension contributions and growth
Use the pension calculator to model pension contributions, projected growth and possible retirement value. It can help you compare contribution levels before checking detailed allowance rules.
Pension Calculator
Estimate pension pot growth from regular contributions and investment assumptions.
Key pension allowance figures
These are the core 2026/27 pension allowance figures for most planning conversations.
| Rule | 2026/27 figure | What it means |
|---|---|---|
| Standard annual allowance | £60,000 | The main annual limit for tax-relieved pension saving. |
| Money Purchase Annual Allowance | £10,000 | Lower limit that can apply after flexibly accessing taxable defined contribution pension money. |
| Tapered annual allowance | Minimum £10,000 | High earners can have their annual allowance reduced, subject to income tests. |
| Adjusted income level for tapering | £260,000 | The adjusted income point above which tapering can apply if threshold income rules are also met. |
| Threshold income level | £200,000 | A separate income test used when deciding whether tapering applies. |
Carry forward
Carry forward can let you use unused pension annual allowance from the previous three tax years, provided you were a member of a UK registered pension scheme in those years.
This can be useful if you receive a bonus, have irregular income, or want to make a larger pension contribution after several years of lower contributions.
Carry forward calculations can become technical because you must check each tax year separately, compare pension input amounts and consider any tapering or Money Purchase Annual Allowance rules.
Money Purchase Annual Allowance
The Money Purchase Annual Allowance, or MPAA, can apply after you flexibly access taxable money from a defined contribution pension.
For 2026/27, the MPAA is £10,000. Once triggered, it limits tax-relieved contributions into defined contribution pensions.
This is important if you plan to draw from a pension while still working and paying into a pension. Taking tax-free cash alone does not always trigger the MPAA, but taking taxable flexible income often can.
Planning warning: check the MPAA rules before taking flexible taxable pension income if you still want to make meaningful pension contributions.
Tapered annual allowance
High earners may have their annual allowance reduced through tapering. For 2026/27, tapering can apply when adjusted income is over £260,000 and the threshold income test is also met.
The allowance is reduced by £1 for every £2 of adjusted income above the limit, down to a minimum tapered annual allowance of £10,000.
Tapering is one of the most common reasons high earners need detailed pension advice before making large contributions.
Example pension annual allowance scenarios
| Scenario | Likely issue | Planning point |
|---|---|---|
| You and your employer contribute £12,000 in a year | Usually below the standard annual allowance | Still check earnings, tax relief and scheme rules. |
| You receive a large bonus and want to pay extra into pension | Annual allowance and carry forward | Unused allowance from previous years may help. |
| You are a high earner | Tapered annual allowance | Your allowance may be below £60,000. |
| You have flexibly accessed taxable pension income | Money Purchase Annual Allowance | Defined contribution pension saving may be limited to £10,000. |
Common pension annual allowance mistakes
- Counting only personal contributions: employer contributions usually count too.
- Ignoring tax relief added by the pension scheme: gross contributions matter.
- Missing defined benefit pension growth: pension input is not just what you personally paid in.
- Assuming everyone gets £60,000: tapering or the MPAA can reduce the allowance.
- Forgetting carry forward: unused allowance from previous years may help, but rules must be checked.
- Taking pension income without checking MPAA: flexible taxable withdrawals can reduce future pension allowance.