UK Pension Annual Allowance 2025 — £60,000 Limit & Carry Forward
The standard allowance
The annual allowance caps how much can go into your pension each tax year with tax relief — your own contributions, your employer's, and any defined benefit growth combined — at £60,000 for 2026/27. Contributions above the available allowance trigger an annual allowance charge, broadly clawing back the tax relief given on the excess.
Tapering — a two-part gate, not one number
The taper only bites if both of two separate income tests are exceeded — missing either one means no taper applies at all, regardless of the other:
- Threshold income above £200,000. If your threshold income (broadly, income before pension contributions) is £200,000 or less, the taper does not apply, even if adjusted income is above £260,000.
- Adjusted income above £260,000. Adjusted income adds back pension contributions (yours and your employer's, or defined benefit growth) to threshold income.
Where both thresholds are crossed, the £60,000 allowance reduces by £1 for every £2 of adjusted income above £260,000, down to a floor of £10,000 — however high adjusted income climbs beyond that point, the allowance never falls below £10,000.
Worked example
An employee has threshold income of £210,000 (above the £200,000 gate) and adjusted income of £300,000 (£40,000 above the £260,000 taper start point).
- Excess adjusted income: £300,000 − £260,000 = £40,000
- Reduction: £40,000 ÷ 2 = £20,000
- Tapered annual allowance: £60,000 − £20,000 = £40,000 for the year
A colleague with the same £300,000 adjusted income but only £180,000 of threshold income (below the £200,000 gate) is not tapered at all — they keep the full £60,000 allowance, purely because their threshold income test was not crossed, even though their adjusted income figure looks identical to the first employee's.
Carry forward — using up unused allowance from prior years
Unused annual allowance from the previous three tax years can be carried forward and added to the current year's allowance, provided you were a member of a registered pension scheme in each of those years. This is most useful for someone with a large one-off contribution — a bonus year, a business sale, or a late-career catch-up — letting them use several years of unused headroom in a single tax year rather than losing it.
Carry forward uses the allowance that applied in each of those years, not necessarily the current year's £60,000 figure, since the annual allowance amount itself has changed over time — the specific figure for each of the three prior years needs checking individually rather than assumed to be £60,000 throughout.
FAQ
Q: If my adjusted income is £280,000 but my threshold income is only £195,000, am I tapered? A: No — because threshold income does not exceed £200,000, the taper does not apply regardless of how high adjusted income is.
Q: Can the tapered allowance ever go below £10,000? A: No — £10,000 is a hard floor for 2026/27; the taper stops reducing the allowance further once it reaches that level, however high adjusted income climbs beyond the point that would otherwise produce a lower figure.
Q: Does carry forward let me contribute more than my actual earnings in a single year? A: Carry forward increases how much can benefit from tax relief against the annual allowance, but tax relief on personal contributions is separately limited to 100% of your relevant UK earnings for the year — the two limits operate independently, and carry forward does not override the earnings-based limit on personal contributions.
Sources
Figures verified against HMRC/pension-industry guidance as of 30 July 2026:
- gov.uk / HMRC — Pension annual allowance guidance (£60,000 standard allowance for 2026/27; annual allowance charge on excess contributions)
- MoneyHelper — "Tapered annual allowance explained 2026/27" (£200,000 threshold-income gate, £260,000 adjusted-income taper start, £1-per-£2 reduction rate, £10,000 floor)
- gov.uk — Carry forward of unused annual allowance (three-year carry-forward window, scheme membership requirement, year-specific allowance figures)