The £60,000 annual allowance, in short
The annual allowanceThe most you can pay into pensions each tax year with tax relief - £60,000 for 2026/27, covering your own, your employer's and any third-party contributions. Exceeding it triggers a tax charge. is the most you can add to your pensions in a tax year (6 April to 5 April) without a tax charge. For 2026/27 it is £60,000, unchanged since 2023/24 when it rose from £40,000. It counts all the money that goes in - your own contributions, your employer's, and any from a third party.
Two things surprise people. First, employer contributions count too, so a generous workplace pension can use more of the allowance than you expect. Second, for a defined-benefit (final-salary) pension there is no cash figure - the amount that counts is the growth in your promised pension over the year, worked out with a fixed method covered further down. Separately, tax relief on your personal contributions is capped at the higher of £3,600 or 100% of your UK taxable earnings.
Two different "tapers" - do not mix them up. On social media "the taper" often means the £100,000 personal-allowance trap, which is an income-tax effect covered in our 60% tax trap guide. This page is about a different one: the annual allowance taper, which cuts how much you can pay into a pension and starts around £200,000 of income.
Work out your available allowance
Enter your pension contributions for this year and the last three. If you are a high earner, add your income figures so the calculator can apply the taper - to each year in turn, which is the part most tools miss. It works on the 2026/27 rules.
An estimate on the 2026/27 rules, to help you plan. For a defined-benefit scheme, enter the pension input amount from your annual statement. Check your position with your scheme or an adviser before acting.
Carry forward - using unused allowance from earlier years
If your pension savings in any of the previous 3 tax years were below that year's allowance, you can add the unused amount to this year's allowance. You do not claim it - carry forwardAdding unused annual allowance from the previous 3 tax years to the current year's allowance. You must have been a pension scheme member in each year you carry forward from. is automatic - but you must have been a member of a registered pension scheme in each year you carry forward from - and note you do not need to have paid anything in that year, only to have been a member, so a dormant year is not automatically worthless.
The order is fixed. GOV.UK puts it plainly: use the current year's allowance first, then the unused allowance from earlier years, and if you have unused allowance from more than one year, "use them in order of earliest to most recent". So a full unused three years on top of the current £60,000 can allow up to £240,000 in one year - the calculator above adds it up for you, and re-tapers any high-income year first.
The catch most tools miss. A flat £60,000 does not apply to every past year automatically. If the taper cut your allowance in one of those years, the unused amount is measured against your reduced allowance for that year, not the full £60,000. That is why the calculator asks whether your adjusted income was over £260,000 in any prior year.
The tapered annual allowance - high earners
If you earn above certain thresholds your allowance is reduced under the tapered annual allowanceThe reduction of the annual allowance for high earners: once adjusted income tops £260,000, the allowance falls £1 for every £2 of excess, down to a £10,000 floor at £360,000.. Two income tests apply, and both must be crossed for the taper to bite:
Threshold income is broadly your taxable income minus your own pension contributions. If it is £200,000 or below, the taper never applies, however high your adjusted income. One trap here: a salary-sacrifice pension arrangement set up after 8 July 2015 is added back into threshold income, so newer salary sacrifice does not pull you under the line the way people expect.
Adjusted income is broadly your taxable income plus all pension contributions - including your employer's and any defined-benefit growth. If it is over £260,000, your allowance falls by £1 for every £2 above £260,000, down to a minimum of £10,000. The £10,000 floor is reached at an adjusted income of £360,000 (that is £260,000 plus twice the £50,000 of allowance being removed) - above that the allowance stays at £10,000.
A worked example. James has a salary of £280,000 and his employer pays £30,000 into his pension. His threshold income is £280,000 (over £200,000). His adjusted income is £310,000 (£280,000 + £30,000). The excess over £260,000 is £50,000, so his allowance is cut by £25,000 (£50,000 ÷ 2) to a tapered £35,000. His employer has already used £30,000 of that, leaving only £5,000 of headroom.
Working out threshold and adjusted income exactly - from salary, bonus, and each type of pension contribution - takes a few steps. Our Tapered Annual Allowance Calculator derives both figures from your inputs and shows the reduced allowance.
Defined-benefit pensions - the amount that counts
If you are in a defined-benefit (final-salary or career-average) scheme - the NHS, teachers, the civil service, and many others - you never pay in a cash figure, so the allowance is measured by how much your promised pension grew over the year. This is the pension input amount, and HMRC sets a fixed method for it.
Take your built-up annual pension at the start of the year and multiply it by 16. Add any separate lump sum. Then increase that opening value by the Consumer Prices Index figure for the previous September. Do the same at the end of the year (annual pension × 16, plus any lump sum), with no CPI uplift. The difference between the two is your pension input amount.
A worked example. Suppose your scheme pension is £18,000 a year at the start and £19,500 at the end, with no separate lump sum. The closing value is £19,500 × 16 = £312,000. The opening value is £18,000 × 16 = £288,000, then uplifted by CPI. Before the CPI uplift the gross growth is £24,000. The pension input amount is the closing value minus the CPI-uplifted opening value, so it is lower than that - how much lower depends on the September CPI figure. Even so, a £1,500 rise in your annual pension drives a pension input in the tens of thousands, far more than most people expect. A pay rise and promotion in the same year can push a long-serving member over the allowance without a penny of extra contribution.
The money purchase annual allowance (MPAA)
If you have flexibly accessed a defined-contribution pension - for example by taking income from a flexi-access drawdown fund, or a cash lump sum (UFPLS) - your allowance for future defined-contribution savings drops to £10,000. This is the MPAAMoney Purchase Annual Allowance: A reduced £10,000 annual allowance for defined-contribution pensions, triggered once you flexibly access a pension (such as taking drawdown income). It cannot be reversed or carried forward.. It applies from the first flexible withdrawal onwards and cannot be reversed.
Once the MPAA applies, you cannot carry forward unused allowance for defined-contribution savings. If you also have defined-benefit accrual, that is measured against the alternative annual allowance - your annual allowance minus the £10,000 MPAA, so £50,000 for 2026/27 at the full allowance. The MPAA itself cannot be carried forward, but the alternative allowance can.
Actions that do not trigger the MPAA include taking your tax-free lump sum (PCLS) and moving the rest into drawdown without drawing income, taking a small-pot lump sum from a pot of £10,000 or less, and receiving a defined-benefit pension. See our guide to pension lump sum tax for which withdrawal methods trigger it, or model your withdrawal directly. The same withdrawal that triggers the MPAA is often emergency-taxed on the way out.
Going over - the annual allowance charge and Scheme Pays
If your pension savings for the year exceed your available allowance (after carry forward), the excess is added to your taxable income and taxed at your marginal rate of income tax. You report it in the "Pension savings tax charges" section of a Self Assessment return.
You may be able to have the pension scheme pay the charge for you, in exchange for a reduction in your future benefits - "Scheme Pays". Your scheme must do this (mandatory Scheme Pays) if the charge is over £2,000 and your savings in that one scheme exceeded the standard £60,000 allowance. That "standard £60,000" test is why many tapered earners cannot compel their scheme - their charge comes from the reduced allowance, not from breaching £60,000. The notification deadline is 31 July of the year after the tax year following the one the charge relates to - so a charge for the 2025/26 tax year must be notified by 31 July 2027. Our guide to the annual allowance charge and Scheme Pays covers the mandatory-versus-voluntary split and the SA101 reporting boxes in full.
Planning ahead
Employer contributions are the most tax-efficient route for company directors - deductible against corporation tax, free of employer National Insurance, and outside your personal income (see our director salary and dividend strategy guide). But from 6 April 2029, under a measure announced at the Autumn Budget 2025, only the first £2,000 a year of pension contributions made by salary sacrifice will keep its National Insurance exemption - amounts above that become subject to National Insurance, though income-tax relief is unaffected. This is announced policy, not yet law.
From April 2027, unused pension pots come into the estate for Inheritance Tax. Using carry forward to make a large one-off contribution now can therefore create an IHT liability later, so it is worth weighing against keeping accessible ISA savings for early retirement. The interaction is covered in our guide to the 2027 pension IHT changes. Voluntary Class 3 National Insurance to top up your State Pension sits entirely outside the annual allowance.