How Much Can You Contribute to a Pension: Allowance and Taper

For the 2025/26 tax year, how much you can contribute to a pension with full tax relief is capped at the lower of your UK earnings for the year and £60,000 across all your pension schemes combined.¹ You can pay in more than that if you want to, but anything above the limit loses its tax relief and triggers a charge. Very high earners, and anyone who has already started flexibly withdrawing from a pension, work to lower caps.

The £60,000 Annual Allowance

The annual allowance is the total that can go into your pensions in a single tax year while still receiving full tax relief. For 2025/26 it is £60,000.¹

Everything that goes in counts: your own contributions, whatever your employer pays in, and any contributions someone else makes on your behalf.² If you have several pensions, the £60,000 covers the total across all of them, not each one separately.

For a defined contribution (money purchase) pension, your pension input for the year is simply the cash paid in. For a defined benefit (final salary) pension, it is the increase in the value of your promised benefits over the year, not the amount paid in cash. Your scheme administrator will normally tell you the pension input figure to use.³

Contributions count gross, including tax relief. If you pay £800 into a relief-at-source scheme and your provider claims a further £200 from HMRC, £1,000 counts against your annual allowance.⁴

How Much of Your Own Money You Can Contribute

Alongside the £60,000 cap, there is a separate limit on your personal contributions: tax relief only applies up to 100% of your relevant UK earnings for the year.⁴ Relevant earnings mean wages, salary, bonuses, commissions, and self-employment profits. Rental income, investment returns, and dividends do not count.

So if you earn £35,000, you can only get tax relief on personal contributions up to £35,000, even though the annual allowance is higher. If you earn nothing, or very little, you can still pay in up to £3,600 gross a year and receive basic-rate tax relief. That works out at £2,880 from your own pocket, topped up by £720 from HMRC.⁴ It is your responsibility to make sure you are not claiming relief on more than 100% of your earnings; HMRC can ask for excess relief back.

How Much Your Employer Can Add

Employer contributions are not restricted by the 100% earnings rule, so an employer can pay in more than you earn. They do still count toward the £60,000 annual allowance.

Whether you feel the tax relief straight away or have to claim some of it back depends on how your workplace scheme is run. Under a net pay arrangement, your employer takes the whole pension contribution from your salary before working out income tax, so you get relief at your highest rate immediately. Under relief at source, contributions come out of your after-tax pay; the scheme reclaims 20% from HMRC, and higher-rate and additional-rate taxpayers claim the rest through Self Assessment or by asking HMRC to adjust their tax code.

If You Earn Above £200,000: The Tapered Allowance

High earners can lose part of the £60,000 allowance through a mechanism called tapering. Two income figures decide whether it applies to you.

The first is threshold income, broadly your net taxable income minus personal pension contributions. If it is £200,000 or less, tapering does not apply, whatever your other figures. The second is adjusted income, which is threshold income plus employer pension contributions and any increase in defined benefit rights. Tapering kicks in only if threshold income is above £200,000 and adjusted income is above £260,000.

Above that point, the allowance drops by £1 for every £2 of adjusted income over £260,000, down to a floor of £10,000 at £360,000 or more.⁵ Someone with £300,000 of adjusted income has £40,000 of excess, so their allowance falls by £20,000 to £40,000.¹

Because adjusted income counts employer contributions, a generous employer payment can push you into tapering even if your salary alone would not.

If You’ve Already Started Drawing a Pension

Once you flexibly access a defined contribution pension, a permanent lower cap replaces the £60,000 allowance for any further DC savings. This is the Money Purchase Annual Allowance (MPAA), set at £10,000 for 2025/26.¹

Actions that trigger the MPAA include taking income from a flexi-access drawdown fund, receiving an uncrystallised funds pension lump sum, or getting payments from a flexible annuity. What does not trigger it: taking your 25% tax-free lump sum on its own, buying a standard lifetime annuity, receiving a defined benefit pension, or withdrawing from capped drawdown within the original limits.

Triggering the MPAA also stops you carrying forward unused allowance for your DC savings. You must tell your other pension providers within 91 days of the trigger event.²

If you also have defined benefit savings, those are measured against a separate alternative annual allowance of £50,000, so the DC £10,000 and DB £50,000 still combine to £60,000 overall.⁶ Tapering, if it applies to you, reduces the alternative allowance in the same way.

Using Unused Allowance From Previous Years

If you did not use your full annual allowance in the last three tax years, you can carry the unused portion forward and add it to this year’s limit. To use carry forward, you must have been a member of a registered pension scheme during each of those years.⁷

The current year’s allowance is always used first. Only once you go past £60,000 do you dip into prior years, starting with the oldest.⁷ If you paid in only £30,000 in each of the previous three years when the allowance was £60,000, you have £90,000 of unused allowance available on top of this year’s £60,000, giving £150,000 in theory.

In practice, the earnings rule still applies. Your total personal contribution, including the carried-forward part, cannot get tax relief on more than 100% of this year’s earnings. On an £80,000 salary you can contribute £80,000 using carry forward, not £150,000. This matters most for self-employed people with uneven income and for employees receiving a large one-off bonus.

What Happens If You Contribute Above the Limit

You can pay in more than the annual allowance, but the excess triggers an annual allowance charge that reclaims the tax relief given on it. The charge is calculated at your marginal income tax rate, up to 45% for additional-rate taxpayers.¹

You report the charge on your Self Assessment tax return, in the section called “Pension savings tax charges.” Paper filers use supplementary form SA101. The online filing deadline is 31 January after the end of the tax year; for 2025/26 that is 31 January 2027.²

You do not always have to pay the charge yourself. Your scheme is legally required to pay some or all of it from your pension fund if you ask, provided your savings in that scheme exceeded the £60,000 allowance for the year, your total charge is more than £2,000, and you notify the scheme by 31 July of the year after the following tax year. For 2025/26 that deadline is 31 July 2028. Below £2,000 the scheme can choose to pay but does not have to. Either way the charge still goes on your tax return, your future benefits from that scheme are reduced to reflect the payment, and once you have asked the scheme to pay you cannot reverse it.⁸

A Separate Limit on Tax-Free Withdrawals

The rules above cap what you can pay in. A different set of limits caps what you can take out tax-free. The Lump Sum Allowance limits your lifetime tax-free cash to £268,275, typically 25% of your total pension value. The Lump Sum and Death Benefit Allowance caps the combined tax-free lump sums paid to you (for example, on serious ill-health) and to your beneficiaries after your death at £1,073,100. Anything above either limit is taxed as income.⁹ If you registered for protection before 6 April 2024, your figures may be higher. Your pension provider can tell you how much of each allowance you have used.

1
GOV.UK. Pension Schemes Rates
2
GOV.UK. Tax on Your Private Pension Contributions: Annual Allowance
3
GOV.UK. HS345 Pension Savings – Tax Charges (2025)
4
GOV.UK. Tax on Your Private Pension Contributions: Tax Relief
5
GOV.UK. Work Out Your Reduced (Tapered) Annual Allowance
6
GOV.UK. Check if You’ve Gone Above the Money Purchase Annual Allowance
7
GOV.UK. Check if You Have Unused Annual Allowances on Your Pension Savings
8
GOV.UK. Who Must Pay the Pensions Annual Allowance Tax Charge
9
GOV.UK. Tax on Your Private Pension Contributions: Lump Sum Allowance