The UK pension annual allowance for 2025/26, and who gets less than £60,000
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Most people can pay £60,000 into a pension with tax relief in 2025/26 — but a taper for high earners and a separate money purchase allowance can cut that down to just £10,000.
The pension annual allowance stays at £60,000 for the 2025/26 tax year — the most most people can pay into their pensions, across all schemes combined, before an extra tax charge applies. High earners face a lower, tapered version of that allowance that can fall as far as £10,000, and anyone who has already started drawing a flexible taxable income from a defined contribution pension is capped at the same £10,000 figure regardless of what they earn. Both rules catch people who do not realise they apply until an unexpected tax charge lands.
The standard annual allowance for 2025/26
The annual allowance is the total someone can save into their pension pots in a tax year — 6 April to the following 5 April — before facing a tax charge on the excess. It covers contributions from every source together: the individual's own contributions, anything their employer pays in, and the value of tax relief added on top, summed across every pension scheme they belong to, not £60,000 per scheme. The figure has stood at £60,000 since it was raised from a previous £40,000 limit, and it is unchanged again for 2025/26. The confirmed current-year figure is published on GOV.UK: Tax on your private pension contributions — Annual allowance.
How the tapered annual allowance works for high earners
Two separate income tests decide whether the taper applies at all. Both must be met:
| Test | Threshold |
|---|---|
| Threshold income | Over £200,000 |
| Adjusted income | Over £260,000 |
Someone who meets both tests loses £1 of annual allowance for every £2 that their adjusted income sits above £260,000, down to a floor of £10,000 once adjusted income reaches £360,000. Someone whose threshold income stays at or below £200,000 is not affected by the taper at all, however high their adjusted income happens to be — the two tests exist precisely to exclude people with a large one-off adjusted income figure but genuinely modest regular earnings. The full mechanics are set out on GOV.UK: Work out your reduced (tapered) annual allowance.
A worked example of the taper
Someone with adjusted income of £300,000, and threshold income also above £200,000, works out like this:
| Step | Amount |
|---|---|
| Adjusted income above £260,000 | £40,000 |
| Reduction (£1 for every £2 over) | £20,000 |
| Standard allowance | £60,000 |
| Reduced annual allowance | £40,000 |
At the other end of the scale, someone with adjusted income of £360,000 or more has an annual allowance of exactly £10,000 — the taper does not reduce it any further beyond that point, no matter how much higher adjusted income climbs.
The money purchase annual allowance (MPAA)
A separate, fixed £10,000 limit applies to anyone who has "flexibly accessed" a defined contribution pension — broadly, drawn a taxable income from it, rather than simply taking the tax-free lump sum most people can take without triggering anything. Once triggered, the MPAA applies to contributions made from the day after that first flexible withdrawal onward, and it does not depend on income at all: someone earning £30,000 a year who starts drawing a flexible pension income is capped at the same £10,000 figure as someone earning ten times that. It is set out on GOV.UK: Check if you've gone above the money purchase annual allowance. Someone who is both subject to the tapered annual allowance and has triggered the MPAA is generally limited to whichever of the two figures applies to their situation, rather than the two stacking together.
Carrying forward unused allowance
Anyone who did not use their full annual allowance in a previous tax year may be able to carry the unused amount forward and add it to the current year's allowance, provided they were a member of a registered pension scheme in each of the years being carried forward. Carry forward is available from the three previous tax years, which can matter for someone who wants to make a single large contribution — after a bonus or a business sale, for example — well above a single year's £60,000 limit. The same GOV.UK annual allowance guidance above explains which years and conditions qualify.
As an illustration, someone who contributed £20,000 in each of the past three tax years against a £60,000 allowance each year has £40,000 of unused allowance sitting in each of those years, £120,000 in total. Added to this year's own £60,000 allowance, that gives a maximum contribution of £180,000 in the current tax year alone, provided their earnings are high enough to support tax relief on that amount and the earlier years' allowances have not already been carried forward and used elsewhere. Carry forward calculations use up the oldest available year first, so tracking exactly which year's unused allowance has already been claimed matters when a large contribution draws on more than one year at once.
What happens if contributions go over the allowance
Paying in more than the annual allowance that applies to you — whether the standard £60,000 figure, a tapered amount, or the £10,000 MPAA — does not stop the contribution being made, but it does trigger an annual allowance charge. The amount over the limit is added to taxable income for the year and taxed at the saver's normal marginal rate, effectively cancelling out the tax relief that contribution would otherwise have received. It is reported on a self assessment tax return, and in some circumstances the pension scheme itself can agree to pay the charge on the member's behalf in exchange for a reduced pension later, an option known as "scheme pays." Not everyone who goes over their allowance in a given year ends up with a charge, since carrying forward unused allowance from earlier years, as described above, can absorb a contribution that looks oversized against the current year's £60,000 figure alone — which is exactly why checking carry forward before assuming a charge applies is worth doing rather than treating the single-year allowance as the only number that matters.
Sources
- GOV.UK: Tax on your private pension contributions — Annual allowance
- GOV.UK: Work out your reduced (tapered) annual allowance
- GOV.UK: Check if you've gone above the money purchase annual allowance
This is general information, not financial advice. Pension tax rules depend on individual circumstances, including income from all sources and pension scheme membership history. For a decision about your own pension contributions, speak to a regulated financial adviser or check your position directly on GOV.UK.