How Much Can You Pay Into a Pension Tax Free?

For the 2026/27 tax year, you can pay up to £60,000 into a pension tax free, and that figure covers everything going in across all your pensions combined: your own contributions, your employer’s, and the basic-rate relief added by the government. Two things can pull that ceiling down. If you earn less than £60,000, your personal contributions are capped at 100% of your earnings. If you’re a very high earner or you’ve already flexibly drawn taxable money from a pension, a smaller allowance applies. Unused allowance from the previous three tax years can be added on top.

The £60,000 Annual Allowance

The annual allowance is the maximum pension saving that qualifies for tax relief in a single tax year, which runs from 6 April to 5 April.¹ For 2026/27 it sits at £60,000. Every contribution counts toward it: what you pay in personally, what your employer adds, and the basic-rate tax relief your provider claims on your behalf. If you hold pensions with more than one provider, the contributions across all of them are added together.

The allowance applies to the gross value of contributions, so it’s the figure including tax relief, not just what leaves your bank account.

You Can’t Pay in More Than You Earn

Personal contributions attract tax relief only up to 100% of your UK earnings for the year.² If you earn £35,000, that’s your effective personal ceiling — £60,000 only becomes the binding limit once your salary reaches or exceeds £60,000.

Qualifying earnings for this purpose include wages, bonuses, overtime, and profits from self-employment. Dividend income and rental income don’t count.³ That matters for company directors who pay themselves mostly in dividends: pension tax relief tracks the salary portion, not total remuneration.

The earnings cap only bites on your personal contributions. An employer can pay in above your salary without breaching the 100% rule, though those contributions still count toward the £60,000 annual allowance.

If You Have Little or No Income

Even with no earnings, you can pay in £2,880 a year and receive 20% tax relief on top, making a gross contribution of £3,600.² Stay-at-home parents, people between jobs, and anyone whose earnings fall below the personal allowance qualify. The government adds £720 in relief even though no income tax was paid on the money in the first place.

How the Tax Relief Reaches Your Pension

The mechanism depends on how your scheme operates. Most personal pensions and some workplace schemes use relief at source: you contribute from taxed money, and the provider claims 20% back from HMRC and adds it to your pot. If you want £100 in the pension, you pay £80 and the provider reclaims £20.² This runs automatically whether or not you actually pay tax at 20%, which is how non-taxpayers still get basic-rate relief.

Many workplace schemes use net pay instead. Your employer takes your contribution from your salary before calculating income tax, so the money never gets taxed and there’s nothing to reclaim.³ Relief is built into your payslip at your actual marginal rate.

Claiming Higher-Rate Relief

If you pay tax at 40% or 45% and your pension uses relief at source, the provider only reclaims 20%. The rest is yours to collect, but it isn’t automatic. You claim it through Self Assessment or, if you don’t file a return, by contacting HMRC directly.²

For 40% taxpayers in England, Wales, or Northern Ireland, the extra relief is 20% on the contributions falling in the higher-rate band. For 45% taxpayers it’s 25% on contributions in the additional-rate band. Scotland has its own bands, so Scottish taxpayers on 42% can reclaim 22%, and those on 48% can reclaim 28%.² People who move into a higher bracket mid-year or who have never filed Self Assessment sometimes miss thousands of pounds in unclaimed relief.

Net pay schemes need no separate claim, because full relief at your marginal rate is already applied through payroll.

When the £60,000 Shrinks: High Earners

The tapered annual allowance kicks in when two conditions are both met: your threshold income exceeds £200,000 and your adjusted income exceeds £260,000.⁴ Threshold income is broadly your total taxable income minus your own pension contributions. Adjusted income adds back employer contributions and any growth in defined benefit entitlements.

For every £2 of adjusted income above £260,000, the annual allowance drops by £1. It bottoms out at £10,000 once adjusted income reaches £360,000.⁵ Someone with adjusted income of £300,000 loses £20,000 of allowance (half the £40,000 excess), leaving £40,000.

One trap: if you entered a salary sacrifice arrangement after 8 July 2015, the sacrificed amount gets added back when working out threshold income.⁶ The rule stops high earners from using salary sacrifice to push their threshold income below £200,000 and dodge the taper. Arrangements set up before that date aren’t affected.

When the £60,000 Shrinks: Already Drawn Pension Money

Once you flexibly access taxable money from a defined contribution pension, your allowance for future money purchase contributions drops to £10,000. That reduced limit is the Money Purchase Annual Allowance, and it exists to stop people withdrawing pension funds and paying them straight back in to claim relief twice.¹

Triggers include taking income from a flexi-access drawdown fund, withdrawing an uncrystallised funds pension lump sum, exceeding the cap on pre-April 2015 capped drawdown, and taking your whole pot in one go (unless it’s under £10,000 and small pot rules apply).⁷

You don’t trigger it if you only take your 25% tax-free lump sum and leave the rest untouched, buy a standard lifetime annuity with guaranteed payments, or take benefits from a defined benefit scheme.⁷ Once the £10,000 limit applies, it’s permanent and can’t be reversed.

Adding Unused Allowance From Earlier Years

If you didn’t use your full annual allowance in previous tax years, you can carry the unused portion forward and add it to this year’s limit. You can reach back up to three tax years.⁸

The current year’s £60,000 is used first. Any excess draws from carry-forward starting with the oldest available year.⁸ The annual allowance was £60,000 in each of the three preceding years, so someone who made no contributions during 2023/24, 2024/25, and 2025/26 could in theory pay up to £240,000 in 2026/27.⁴

Two conditions apply. You must have been a member of a registered UK pension scheme during each year you’re carrying forward from, even if you contributed nothing that year.⁸ And your total personal contributions still can’t exceed 100% of your earnings for the current year. Carry forward lets you breach £60,000, but not the earnings cap. Someone earning £80,000 with £120,000 of carried-forward allowance can pay in £80,000, not £180,000.

Unused MPAA can’t be carried forward. If the MPAA applies to you, any unused portion of the alternative annual allowance for defined benefit savings still can.

If You Go Over the Limit

Contributions above your available allowance attract a tax charge. The excess is added to your taxable income for the year and taxed at your marginal rate, effectively clawing back the relief you received.¹ You have to report the excess on a Self Assessment tax return, even if you don’t normally file one.

If you hold pensions with several providers, each will send a pension savings statement showing contributions to their scheme. You’re the one responsible for adding them together and working out whether the overall limit has been breached. HMRC provides an online calculator.

Scheme Pays

Instead of paying the charge yourself, you can ask your pension scheme to pay it on your behalf. The scheme deducts the amount from your pension benefits, reducing what you eventually receive. A scheme is legally required to offer this when your charge exceeds £2,000 and your total pension input to that scheme exceeds the standard £60,000 allowance.⁵ Where the excess arises from the tapered allowance or the MPAA rather than the standard £60,000, mandatory scheme pays doesn’t apply, though a scheme may still offer it voluntarily.

Paying In Tax Free Is Not the Same as Taking Out Tax Free

Everything above governs what you can put into a pension and receive tax relief on. Separate rules cap how much you can later withdraw tax free, principally the £268,275 lump sum allowance and the £1,073,100 lump sum and death benefit allowance introduced when the lifetime allowance was abolished on 6 April 2024.⁹ Those limits don’t affect how much you can contribute, but they’re worth knowing about if you’re aiming to build a large pot, because tax-free withdrawals above them are taxed as income.

1
GOV.UK. Tax on Your Private Pension Contributions – Annual Allowance
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GOV.UK. Tax on Your Private Pension Contributions – Tax Relief
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MoneyHelper. Tax Relief and Your Pension
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GOV.UK. Pension Schemes Rates
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MoneyHelper. Tapered Annual Allowance Explained 2026/27
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GOV.UK. Pensions Tax Manual – PTM057100
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MoneyHelper. Money Purchase Annual Allowance MPAA
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GOV.UK. Check if You Have Unused Annual Allowances on Your Pension Savings
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GOV.UK. Tax on Your Private Pension Contributions – Lump Sum Allowance