Written by PensionTaxReliefCalculator Editorial. Reviewed against official UK guidance. Methodology
How much can you pay into a pension in 2026/27? The £60,000 annual allowance, 100% earnings cap, £10,000 MPAA, carry-forward rules and tapered allowance for high earners, all explained with worked examples.
The pension annual allowance (AA) for 2026/27 is £60,000. This is the total pension input, from all sources, across all registered pension schemes, that can be made in a single tax year while attracting tax relief. 'Total pension input' means: all employee contributions you make, all employer contributions (including salary sacrifice amounts), any third-party contributions, and for defined benefit (DB) schemes, an imputed value of the annual accrual (calculated as 16 × increase in annual pension value).
The annual allowance was raised from £40,000 to £60,000 on 6 April 2023 and has remained at £60,000 since. For most people, £60,000 is an academic ceiling, typical UK pension savers contribute far less. But for high earners making large contributions, directors making significant employer contributions, or anyone using carry forward to make a catch-up contribution, the limit is highly relevant. Breaching it triggers an annual allowance charge at your marginal income tax rate on the excess.
The allowance is separate from and in addition to the employer contribution minimum under auto-enrolment. An employer contributing 10% of salary to a pension is not 'using up' their employee's annual allowance in any problematic way, unless the total is approaching £60,000. For most workers, employer and employee contributions combined will be well under £60,000 annually.
Alongside the £60,000 annual allowance, personal pension contributions are also capped at 100% of your relevant UK earnings in the year. Relevant UK earnings include: employment income (salary, wages, bonuses), self-employment trading profits, and certain partnership income. They do not include: dividends, rental income, savings interest, pension income or capital gains. This means a company director drawing a £10,000 salary and £150,000 dividends can only make £10,000 in personal pension contributions that attract tax relief.
The earnings cap applies to personal contributions only, employer contributions are not constrained by the earnings cap, though they still count towards the £60,000 AA. This is why company directors typically maximise employer pension contributions from the company rather than personal contributions: they bypass the earnings cap while still within the AA. The rule has an important exception for those with no earnings: you can contribute up to £2,880 net (£3,600 gross) and still receive the 20% basic-rate top-up under relief at source, even with zero income.
Carry forward allows you to use unused annual allowance from the three previous tax years when your total contributions in the current year exceed £60,000. The three years available for carry forward in 2026/27 are 2023/24, 2024/25 and 2025/26, each with an AA of £60,000. You use the earliest year's unused allowance first.
To use carry forward, you must have been a member of a registered pension scheme in each year whose allowance you wish to use. You do not need to have contributed in that year, simply being enrolled counts. For carry-forward years, the unused allowance is that year's AA minus total pension inputs in that year (minimum zero). Available carry forward from three years with minimal contributions: up to 3 × £60,000 = £180,000. Combined with the current year's £60,000, you could contribute up to £240,000 in 2026/27, subject to the earnings cap.
Worked example: in 2023/24 you contributed £8,000; in 2024/25 £12,000; in 2025/26 £15,000. Unused carry forward: (£60,000 − £8,000) + (£60,000 − £12,000) + (£60,000 − £15,000) = £52,000 + £48,000 + £45,000 = £145,000. Your maximum contribution in 2026/27 (personal and employer combined): £60,000 + £145,000 = £205,000. Personal contributions limited to 100% of 2026/27 earnings; employer contributions are not earnings-capped.
Once you take flexible income from a defined contribution pension, through flexi-access drawdown, an UFPLS, or certain flexible annuity purchases, you trigger the Money Purchase Annual Allowance (MPAA). The MPAA for 2026/27 is £10,000. It replaces the standard £60,000 annual allowance for future DC contributions permanently, it cannot be reversed or increased by carry forward.
Taking your 25% tax-free cash without entering drawdown does not trigger the MPAA. Neither does accessing a DB pension, taking a small-pot lump sum (under £10,000), or taking a guaranteed (fixed) annuity. If you are still working and wish to continue making large pension contributions in future, the timing of accessing drawdown is critically important. Many people approaching retirement are unaware that drawing income from a small crystallised pot can restrict their future DC contributions to £10,000, a significant planning trap.
For those approaching retirement with multiple pots, a useful strategy is to ensure you do not trigger the MPAA until you have finished making significant DC contributions. If you are 57, still earning £60,000 and contributing £30,000 per year to a SIPP, triggering the MPAA by accessing a small legacy pension pot would immediately halve your permissible annual contribution. Careful sequencing of pension access can preserve the full £60,000 AA for longer.
For high earners, the standard £60,000 AA is tapered downwards. The taper applies only when two conditions are both met: (1) threshold income exceeds £200,000, and (2) adjusted income exceeds £260,000. Threshold income is total income excluding employer pension contributions. Adjusted income is threshold income plus employer pension contributions. Where both thresholds are exceeded, the AA reduces by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000.
The calculation: adjusted income of £280,000 → taper = (£280,000 − £260,000) / 2 = £10,000 reduction. Reduced AA: £60,000 − £10,000 = £50,000. At £360,000 adjusted income, the taper is £50,000, giving a minimum AA of £10,000.
Carry forward can be used against the tapered allowance, but calculating this correctly is complex, as the tapered allowance for each prior year must be calculated individually. Professional advice is strongly recommended for anyone within the tapering zone, particularly where DB scheme accrual is involved (as DB contributions increase adjusted income and can push someone into the taper without any explicit decision to do so).
The standard annual allowance is £60,000, or 100% of relevant UK earnings if lower. With carry forward from three years of unused allowance, the theoretical maximum is up to £240,000, but personal contributions are still limited to 100% of earnings. Employer contributions fill the gap without the earnings cap.
Yes. Employer contributions, salary sacrifice amounts, and your own contributions all count together towards the £60,000 AA. Total pension inputs, from all sources and all schemes, must stay within the limit.
The excess is added to your taxable income for the year and charged at your marginal tax rate. The charge is reported via Self Assessment. You can ask your pension scheme to pay it directly from your pension pot, known as 'scheme pays', if the excess is over £2,000.
You must have been a member of a registered pension scheme in each year whose unused allowance you wish to carry forward. Simply being enrolled (even with zero contributions) qualifies. You cannot use carry-forward for a year in which you were not a scheme member.