Pension Annual Allowance
UK tax glossary · Last reviewed: April 2026
The Annual Allowance (AA) is £60,000 for most people in 2026/27. It covers total pension contributions: employee, employer, and any other contributions combined. Contributions above the AA trigger an Annual Allowance Charge at your marginal rate.
The AA is tapered for high earners: those with threshold income above £200,000 and adjusted income above £260,000 see the AA reduce by £1 for every £2 of adjusted income over £260,000, down to a minimum of £10,000.
Unused AA from the past three tax years can be carried forward (carry forward). This is useful for one-off large contributions, such as after a business sale or bonus. You must have been a member of a registered pension in each carry-forward year.
Worked example
Contributions this year: £80,000. AA: £60,000. Unused AA from prior 3 years: £30,000 (e.g. three years × £10,000 unused each year). Total available: £90,000. No AA charge: £80,000 < £90,000.
Common questions
Does employer pension contributions count toward my Annual Allowance?
Yes. The Annual Allowance includes all contributions to your pension, including employer contributions. Total contributions from all sources must stay within £60,000 (or your tapered limit).
What happens if I exceed the Annual Allowance?
You pay an Annual Allowance Charge on the excess at your marginal tax rate, effectively cancelling the relief on contributions above the limit. Report the charge via Self Assessment.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.