Pension Annual Allowance 2026/27: the £60,000 limit, carry forward and the taper

The annual allowance is the most that can go into your pensions in a tax year while still attracting tax relief. For 2026/27 it is £60,000, and that ceiling covers everything arriving in the pot — your own payments, whatever your employer puts in, and the tax relief added on top.

Exceed it and you face an annual allowance charge designed to claw back the relief you should not have received. Most people never come close. But three groups regularly do, often without realising until a tax return is due: high earners caught by the taper, anyone who has already taken flexible income from a pension, and people making a one-off large contribution after a bonus, a business sale or an inheritance.

At a glance

What counts towards the £60,000?

The allowance measures your total pension input for the year, not just the money leaving your current account. For a defined contribution scheme that means three things added together:

• Your own contributions, grossed up. Pay £800 from your bank account and £1,000 counts, because basic-rate relief is added at source.
• Everything your employer pays in, including any amount you gave up salary for under a salary sacrifice arrangement.
• Contributions to every scheme you hold, added together. It is £60,000 across all your pensions, not £60,000 each. Someone with a workplace scheme and a personal SIPP has one shared allowance.

Defined benefit schemes work on an entirely different basis, and this is where the biggest surprises happen. Your pension input is not the contributions paid. It is broadly the increase in the value of your promised pension over the year, multiplied by 16, with an adjustment for inflation. A promotion or a significant pay rise in a final salary or career average scheme can produce a pension input amount far larger than anything that appeared on your payslip.

If you are in a public sector scheme — NHS, teachers, civil service, armed forces — and you have had a material pay rise, this is worth checking rather than assuming.

How does carry forward work?

If you did not use your full allowance in the previous three tax years, the unused part can be carried forward. This is what makes a contribution well above £60,000 possible in a single year, and it is the most useful planning tool in the whole system.

Two conditions apply, and both catch people out.

First, you must have been a member of a UK registered pension scheme in each year you carry forward from. Membership is enough — you do not need to have contributed. A dormant workplace pension from an old job counts. A year in which you held no pension at all does not, and cannot be recovered.

Second, and more restrictive, your own personal contributions can never exceed your relevant UK earnings for the year you actually pay them. Carry forward lifts the annual allowance ceiling. It does nothing to the earnings ceiling. This is the single most common misunderstanding in this area.

Allowances are used in a set order: the current year first, then the oldest carried-forward year, working forwards.

Worked example: how much can Priya contribute?

Priya earns £90,000 and has paid £10,000 a year into her pension for each of the last three years. She receives an inheritance and wants to make a large contribution.

On the annual allowance test alone, Priya could put in £210,000. In practice her personal contribution is capped at £90,000, her relevant earnings for the year. The inheritance does not raise that ceiling, because inherited money is not earnings.

If her employer were to contribute as well, employer payments are not limited by her earnings — only by the £210,000 of available allowance and whatever the company can commercially justify. For company directors, that distinction is often the whole planning conversation.

Who is affected by the tapered annual allowance?

High earners get less than £60,000. The taper begins once adjusted income exceeds £260,000. For every £2 above that threshold, the allowance falls by £1, down to a floor of £10,000.

Two separate income measures decide this, and you need both:

• Adjusted income — broadly your total taxable income plus employer pension contributions. This is the figure the taper is calculated on.
• Threshold income — broadly your total taxable income excluding pension contributions. If this is £200,000 or below, the taper does not apply at all, however high adjusted income is.

That second test is a genuine planning lever. A large personal contribution reduces threshold income, and can keep someone under £200,000 and therefore out of the taper entirely — preserving the full £60,000 allowance rather than a tapered one.

Note that a tapered allowance still permits carry forward, using the tapered figure for each earlier year rather than the full £60,000.

What is the MPAA, and what triggers it?

Take taxable income flexibly from a defined contribution pension and you permanently trigger the money purchase annual allowance of £10,000 a year. Carry forward cannot be used against it, and once triggered it cannot be reversed.

What does and does not trigger it matters enormously:

This catches people who dip into a pension at 55 or 57 while still working, then later want to rebuild their savings and discover the door has narrowed to £10,000 a year for the rest of their working life. If you are still earning and might want to contribute meaningfully again, understand this before you touch the pot. Our guides to pension drawdown and small pension pots cover the routes that avoid it.

What happens if you exceed the allowance?

The excess is added to your taxable income for the year and taxed at your marginal rate. That is the mechanism — it removes relief you were not entitled to, rather than imposing an extra penalty. You report it on your Self Assessment return.

Where the charge exceeds £2,000 and you have breached a single scheme's allowance, you can ask that scheme to pay the charge from your pot under scheme pays. That solves an immediate cash-flow problem, but it permanently reduces the fund and the growth it would have produced. Treat it as a remedy, not a plan.

Your provider must send you a pension savings statement if your input to that scheme exceeds £60,000. It has no visibility of your other schemes, so if you contribute to more than one, adding them up is your responsibility and nobody else's.

Public sector schemes: why the numbers look strange

If you are in the NHS, teachers', civil service, police or armed forces pension scheme, your pension input amount bears almost no relationship to what you see deducted from your pay. It is driven by the growth in your promised pension over the year, scaled by a factor of 16.

The practical effect is that a large pay rise can generate a pension input amount running into tens of thousands of pounds, even though your contributions barely moved. Consultants, senior teachers and senior officers have been caught by this repeatedly, sometimes receiving an unexpected annual allowance charge years after the event.

Two things help. Your scheme must issue a pension savings statement if your input exceeds £60,000 in that scheme, so read it rather than filing it. And an inflation adjustment is applied to the opening value, which in higher-inflation years significantly reduces the measured growth. If you have had a promotion, a significant increment or a backdated pay award, ask your scheme for the figure rather than estimating it.

Three checks worth making before 5 April

1. Total your pension input across every scheme. The statement threshold is per scheme; the allowance is not.
2. Model whether a bonus tips you into the taper. Sacrificing part of a bonus into the pension reduces threshold income and may preserve the full allowance — worth thousands in relief.
3. Check what carry forward you have left. The oldest of the three years drops away every 6 April. Unused allowance from three years ago is genuinely use-it-or-lose-it.

Work through your own position with the Annual Allowance Calculator, and see what relief a contribution actually attracts using the Pension Tax Relief Calculator.

A note on how to use this

This guide explains the rules as they stand for the 2026/27 tax year and is written to help you understand your own position. It is general information, not personal financial advice — your circumstances change the answer, sometimes completely. For a decision that matters, speak to a regulated adviser or check directly with HMRC. Our calculation methodology sets out where every figure on this site comes from.

Where these figures come from

Every rate and threshold on this page is checked against HMRC's published guidance for the 2026/27 tax year. If you spot a figure that looks out of date, please tell us.

• GOV.UK guidance for this topic