Can You Pay More Into a Pension Than You Earn? Relevant UK Earnings Explained
The £60,000 annual allowance gets the headlines, but for most people the limit that actually bites is a different one: you only get tax relief on personal contributions up to your relevant UK earnings for the year. Dividends, rent and interest don't count. Here is what does, with the numbers.
You can pay in as much as you like, but tax relief on your own contributions stops at 100% of your relevant UK earnings for the tax year, or £3,600 gross if that is higher 12. Relevant UK earnings are employment income (salary, bonus, taxable benefits) and trading profits, plus some patent income 3. Dividends, savings interest, rent and pension income don't count. On a £10,000 salary, the most you can pay into a relief-at-source pension with relief is £8,000, which the provider tops up to £10,000. Employer contributions are not limited by your earnings.
- The relief limit is the higher of your relevant UK earnings chargeable to Income Tax and the £3,600 basic amount. 2
- Earnings are measured for the same tax year as the contribution; there's no carry back. 1
- Furnished holiday letting profits stopped counting from 2025/26. 3
- Carry forward lifts the annual allowance, not this earnings limit. 4
- Both limits apply: relief needs the contribution within your earnings and within your annual allowance. 4
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What counts as relevant UK earnings
| Income | Counts? |
|---|---|
| Salary, wages, overtime, bonus, commission | Yes |
| Taxable benefits in kind (company car, medical cover) | Yes, as employment income |
| Self-employed and partnership trading profits | Yes |
| Patent income, if you devised the invention | Yes |
| Furnished holiday letting profits | No, from 2025/26 |
| Dividends, including from your own company | No |
| Savings interest and other investment income | No |
| Ordinary rental income | No |
| Pension income, including the State Pension | No |
| Salary you have given up through salary sacrifice | No: it is no longer your pay |
The definition is in section 189 of the Finance Act 2004: employment income, income "immediately derived from the carrying on or exercise of a trade, profession or vocation", and patent income where you devised the invention 3. The old furnished holiday lettings category was omitted for Income Tax from 2025/26 by the Finance Act 2025 3. Earnings that aren't taxable in the UK under a double tax agreement are treated as not chargeable, so they don't count either 3.
Worked examples
A £10,000 salary
Your relief limit is £10,000 gross. In a relief-at-source SIPP you pay £8,000 and the provider claims £2,000, so £10,000 goes in. If you paid £10,000 yourself, it would be grossed up to £12,500: £2,500 more than your earnings, and that excess gets no relief. The provider may have to return relief it claimed on it.
A company director paid mostly in dividends
Salary £12,570, dividends £50,000. Only the salary is relevant earnings, so personal contributions get relief on up to £12,570 gross (£10,056 paid in). The way round it is an employer contribution from the company, which isn't capped by salary; see employer contributions and the annual allowance.
A landlord with a small job
Rental profits £40,000 and a part-time salary of £8,000. Relief limit: £8,000 gross. The rent doesn't count, however large it is.
A very high earner
Salary £425,000. The earnings limit is no constraint, but the annual allowance is: with threshold income over £200,000 and adjusted income of £360,000 or more, the tapered allowance is the £10,000 minimum 5. That £10,000 is a gross figure and includes employer contributions.
| Situation | Earnings limit (gross) | Annual allowance | Most you can pay in with relief |
|---|---|---|---|
| £10,000 salary | £10,000 | £60,000 | £10,000 gross (£8,000 paid) |
| £12,570 salary + £50,000 dividends | £12,570 | £60,000 | £12,570 gross (£10,056 paid) |
| £8,000 salary + £40,000 rent | £8,000 | £60,000 | £8,000 gross (£6,400 paid) |
| £90,000 salary, unused allowance £50,000 | £90,000 | £60,000 + £50,000 | £90,000 gross (£72,000 paid) |
| No earnings | £3,600 basic amount | £60,000 | £3,600 gross (£2,880 paid) |
Assumes relief-at-source contributions, no employer contributions and no MPAA. In the £90,000 row, carry forward makes £110,000 of allowance available, but earnings cap relief at £90,000.
Carry forward doesn't raise the earnings limit
Carry forward lets you use unused annual allowance from the previous three tax years 4. It does nothing for the earnings limit: your own contributions still only get relief up to 100% of this year's earnings. That is why a self-employed person with a big profit year can use carry forward fully, while someone with a modest salary can't, however much allowance they have built up. Employer contributions aren't restricted by your earnings, so they can use carry forward in full.
Timing: earnings and contributions in the same year
The test compares contributions paid in a tax year with earnings for that tax year 1. There is no way to treat a contribution as paid in an earlier year. If your profits or bonus won't be known until after 5 April, estimate prudently: relief on anything above your actual earnings is lost.
Frequently asked questions
Can I pay more into my pension than I earn?
You can pay in more, but tax relief on your own contributions is limited to 100% of your relevant UK earnings for the tax year, or £3,600 gross if higher. Anything above that gets no relief.
If I earn £10,000, how much can I put in my SIPP?
£8,000. The provider adds £2,000, making £10,000 gross, which matches your earnings. Paying £10,000 yourself would gross up to £12,500, and the £2,500 above your earnings would get no relief.
Do dividends count as relevant UK earnings?
No, not even dividends from your own company. Only employment income, trading profits and some patent income count. Directors paid mostly in dividends often use employer contributions instead, which are not limited by earnings.
Does rental income count?
No. Ordinary rental income is not relevant UK earnings, and furnished holiday letting profits stopped counting from the 2025/26 tax year.
Does carry forward let me pay in more than I earn?
No. Carry forward increases your annual allowance, not the earnings limit. Your own contributions still only get relief up to 100% of this year's earnings.
Is the £10,000 tapered allowance gross?
Yes. Annual allowance figures, including the £10,000 minimum tapered allowance, are gross and include employer contributions.
Related: maximum pension contributions 2026/27 · contributions with no earnings · carry forward rules
Sources & references
- PTM044100: tax relief for members, conditions — HMRC Pensions Tax Manual
- Finance Act 2004, section 190: annual limit for relief — legislation.gov.uk
- Finance Act 2004, section 189: relevant UK individual and relevant UK earnings — legislation.gov.uk
- Check for unused annual allowance (carry forward) — GOV.UK
- Pension schemes rates and allowances — HMRC (GOV.UK)
Every headline figure above is checked against the official GOV.UK / HMRC guidance listed here for the 2026/27 tax year. Links open on GOV.UK.
Disclaimer: General information for the 2026/27 tax year, not financial or tax advice. Unusual income (overseas earnings, post-cessation receipts) has its own rules.