How Much Can I Pay Into My Pension: £60,000 Limit and Carry Forward

You can pay as much as you like into a UK pension, but the amount that qualifies for tax relief is capped. For the 2025/26 tax year the answer to how much you can pay into your pension with full tax advantages comes down to two numbers: a £60,000 annual allowance covering everything going in from all sources, and a separate rule that limits your own contributions to 100% of your UK earnings (or £3,600 if you earn less than that). Go beyond either and a tax charge claws back the benefit.

The £60,000 Annual Allowance

The annual allowance is the headline figure. For 2025/26 it sits at £60,000, unchanged since 2023/24.¹ It is a gross figure that includes the basic-rate tax relief your provider claims for you. Pay £48,000 in yourself and the provider adds £12,000 of relief; the full £60,000 counts.

Two points catch people out. First, the allowance covers all your registered pensions combined, not each scheme separately. A workplace pension and a personal SIPP on the side share the same £60,000. Second, employer contributions eat into it. If your employer pays in £25,000, you have £35,000 of room left for your own contributions plus relief, not the full £60,000.

The Earnings Rule for Your Own Contributions

Alongside the annual allowance, a separate rule governs personal contributions. You get tax relief on what you pay in up to 100% of your relevant UK earnings for the tax year, or £3,600 gross if that is higher.² Relevant UK earnings means income that is both earned and taxable here: salary, wages, bonuses, commission, and statutory payments such as sick pay or maternity pay.

Passive income does not count. Rental income, dividends, savings interest, and pension income from previous schemes are all excluded. If your only income is £50,000 of dividends, you cannot get tax relief on £50,000 of personal contributions. You could still put in the £3,600 basic amount (£2,880 from you, £720 in relief).

Employer contributions work differently. They are not restricted by your earnings, so a company can contribute up to the full annual allowance regardless of the salary it pays you, as long as the combined total stays within £60,000. This matters for business owners who pay themselves a small salary and fund pensions through their company.

Tax relief on personal contributions is only available to UK residents under 75. After 75, employer contributions can still go in and count toward the annual allowance, but your own contributions no longer attract relief.¹

Non-Earners and Children

You do not need any earnings to pay into a pension. Anyone under 75, including stay-at-home parents, carers, students, and children, can put £2,880 net into a relief-at-source pension each year and have the provider add £720 of basic-rate relief, taking the gross contribution to £3,600.³ A parent or grandparent can open a pension for a child and pay in on the same terms.

When Your Limit Is Lower

Two situations replace the standard £60,000 with a smaller figure. Both are worth checking before making a large contribution.

The Tapered Annual Allowance for High Earners

If you earn above certain thresholds, the annual allowance is reduced by the taper, set out in section 228ZA of the Finance Act 2004.⁴ Two income tests apply:

Threshold income is broadly your taxable income minus your own pension contributions. If this is £200,000 or less, the taper does not affect you no matter how high your adjusted income is.¹
Adjusted income is your threshold income with employer pension contributions and certain salary sacrifice amounts added back. The taper starts when this exceeds £260,000.¹

Both must be exceeded before the taper bites. For every £2 of adjusted income above £260,000, your annual allowance drops by £1, down to a floor of £10,000, reached at adjusted income of £360,000.⁵ Recalculate each year if you are near these figures. A pay rise, one-off bonus, or exercised share options can drop you into taper territory unexpectedly.

The Money Purchase Annual Allowance

Once you start taking taxable money flexibly from a defined contribution pension, a much lower ceiling applies permanently. The money purchase annual allowance restricts future defined contribution inputs to £10,000 a year.¹

It is triggered by taking an uncrystallised funds pension lump sum or drawing taxable income through flexi-access drawdown. It is not triggered by taking your 25% tax-free lump sum on its own, buying a level or increasing annuity, or drawing from a defined benefit scheme. Small pots worth £10,000 or less can also be cashed in without triggering it, subject to limits on how many.

After triggering the MPAA, you must tell your other active defined contribution providers within 91 days.⁶ The £10,000 limit only applies to money purchase contributions; any ongoing defined benefit accrual is tested separately against the remainder of the standard allowance.

Using Unused Allowance from Previous Years

Carry forward lets you contribute more than the current year’s allowance if you underused it recently. You can bring forward unused allowance from the previous three tax years, provided you were a member of a registered pension scheme during each of those years.⁷

You must use the current year’s allowance first, then dip into earlier years starting with the oldest. In theory, stacking three prior years plus the current year could allow a contribution of up to £240,000, though your personal contributions are still capped by your earnings for the year in which you make them. The allowance you carry forward for each year is whatever applied then, so if the taper reduced your limit in a past year, only the tapered amount is available. Carry forward is not available if you have triggered the MPAA.⁷

How Defined Benefit Pensions Count

Measuring annual allowance use in a defined benefit scheme is less obvious because there is no pot growing visibly. HMRC uses a formula: the pension input amount is the increase in the annual pension you have earned over the year, multiplied by 16, plus any increase in your lump sum entitlement.⁸

If your annual pension entitlement grew by £3,000 in the year, that counts as £48,000 of pension input, using most of your £60,000 allowance before any personal contributions to other schemes. Promotions, pay rises, and added-years purchases can push the input amount higher than expected. If you have generous defined benefit accrual and a personal pension on the side, check the combined total before topping up.

If You Go Over

Exceeding the allowance does not mean HMRC rejects the contribution. The money stays put, but an annual allowance charge falls on the excess at your marginal income tax rate, effectively stripping the tax relief back off. Someone at 40% with a £5,000 excess would owe £2,000.

You report the charge on your Self Assessment return, even if you do not normally file one, using the pension savings tax charges section or form SA101 on paper.⁹

You can also ask the scheme to pay the charge for you and reduce your future benefits accordingly. The scheme must offer this “scheme pays” option where your savings in that scheme exceed the annual allowance and the charge exceeds £2,000. The request must reach the scheme by 31 July in the year after the tax year following the one in which the charge arose.¹⁰ Some schemes offer scheme pays voluntarily below those thresholds, but they are not obliged to.

1
HM Revenue & Customs. Pension Schemes Rates
2
HM Revenue & Customs. Pensions Tax Manual – PTM044100
3
MoneyHelper. The Annual Allowance for Tax Relief on Pension Savings
4
legislation.gov.uk. Finance Act 2004 – Section 228ZA
5
HM Revenue & Customs. Pensions Tax Manual – PTM057100
6
MoneyHelper. The Money Purchase Annual Allowance (MPAA) for Pension Savings
7
MoneyHelper. Carry Forward: Increase Your Annual Allowance for Pension Savings
8
HM Revenue & Customs. Annual Allowance: Pension Input Amounts: Defined Benefits Arrangements: General
9
GOV.UK. Tax on Your Private Pension Contributions: Annual Allowance
10
GOV.UK. Who Must Pay the Pensions Annual Allowance Tax Charge