Guide
Pension Annual Allowance 2026/27, £60,000 Limit Explained
Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.
The pension annual allowance for 2026/27 is £60,000. That is the maximum total pension input across all your registered schemes in the tax year. This guide covers what counts, how the taper works for high earners, the £10,000 MPAA, and when carry forward lets you go above £60,000.
The standard annual allowance: £60,000
The annual allowance (AA) covers all pension inputs: your own contributions, employer contributions (including salary sacrifice), and for defined benefit schemes, the imputed accrual value (16 × the increase in your annual pension entitlement). Exceed £60,000 and the excess is taxed at your marginal rate. That is the annual allowance charge.
There is a second constraint. Your personal contributions are capped at 100% of your relevant UK earnings, broadly employment income and trading profits. Earn £35,000 and you can only put in £35,000 of personal contributions with tax relief, not £60,000. Employer contributions are not subject to this cap, but they still count towards the £60,000 total.
Quick reference, annual allowance 2026/27:
- Standard annual allowance: £60,000
- Money Purchase Annual Allowance (if triggered): £10,000
- Tapered minimum allowance (highest earners): £10,000
- Taper kicks in when adjusted income exceeds: £260,000
- Maximum carry forward from prior 3 years: up to £180,000
What counts towards the annual allowance
For defined contribution (DC) schemes, all contributions in the pension input period count: employee contributions, employer contributions and salary sacrifice amounts. A salary sacrifice of £8,000 counts as an employer contribution of £8,000 and goes against the AA.
For defined benefit (DB) schemes, the pension input is: 16 × (closing accrued pension − opening accrued pension adjusted for inflation). A public sector worker whose annual pension entitlement rises by £2,000 has a pension input of 16 × £2,000 = £32,000. That can interact significantly with any DC contributions in the same year.
If you have both a DB workplace scheme and a private SIPP, both count against the same £60,000 limit. Get the DB pension input amount from your administrator before making large SIPP contributions.
Money Purchase Annual Allowance (MPAA): £10,000
Once you flexibly access a defined contribution pension, the MPAA of £10,000 replaces the standard £60,000 AA for future DC contributions. Flexible access means:
- Taking income from flexi-access drawdown
- Receiving an uncrystallised funds pension lump sum (UFPLS)
- Purchasing a flexible annuity with an income guarantee and cashback
What does not trigger the MPAA: taking only a tax-free cash lump sum (without entering drawdown), taking a small pot under £10,000, commencing a DB pension, or starting a guaranteed lifetime annuity with no flexibility. The MPAA cannot be reversed. Carry forward cannot increase it. Once triggered, £10,000 per year is your DC limit permanently.
Tapered annual allowance for high earners
The taper applies when both of these conditions are met in the same year:
- Threshold income > £200,000 (income excluding employer pension contributions)
- Adjusted income > £260,000 (threshold income plus employer pension contributions)
When both conditions are met, the AA falls by £1 for every £2 of adjusted income above £260,000. The minimum is £10,000. You hit that at £360,000 adjusted income.
Taper example:
- Adjusted income: £300,000
- Taper: (£300,000 − £260,000) / 2 = £20,000
- Reduced AA: £60,000 − £20,000 = £40,000
Carry forward: contributing more than £60,000
Carry forward lets you use unused annual allowance from the previous three tax years. For 2026/27 that means 2023/24, 2024/25 and 2025/26, each with a £60,000 AA. You use the earliest year's unused allowance first. You must have been a member of a registered pension scheme in each year you carry forward from.
The theoretical maximum is 3 × £60,000 = £180,000. Add the current year's £60,000 and up to £240,000 in total contributions is possible, subject to the 100% earnings cap on personal contributions.
Check your annual allowance
Check whether your 2026/27 contributions are on track to breach the £60,000 limit.
Frequently asked questions
Do employer contributions count towards my £60,000 limit?
Yes. All pension inputs count: your contributions, your employer's contributions (including salary sacrifice), and any third-party contributions. For DB schemes, the accrual value also counts.
What is the annual allowance charge?
If your total pension inputs exceed your annual allowance, the excess is added to your taxable income and charged at your marginal rate. On a £10,000 excess for a 40% taxpayer: £4,000 charge. You can ask your pension scheme to pay the charge from your pension pot ('scheme pays') if the excess is over £2,000.
I flexibly accessed a pension 3 years ago. Am I affected?
If you triggered the MPAA by taking flexible income (drawdown or UFPLS), your DC contribution limit is £10,000 per year. Check whether what you did qualifies, taking only a tax-free lump sum without entering drawdown does not trigger the MPAA.
Can I use carry forward if I have the MPAA?
No. Carry forward cannot increase the MPAA above £10,000. Once triggered, the £10,000 limit is fixed permanently for DC contributions.
Disclaimer: This guide is for general information only. Consult a qualified financial adviser for personalised advice. Sources: GOV.UK: Pension annual allowance.