The UK Pension Annual Allowance Explained: £60,000, the Taper, and Carry-Forward

What the annual allowance is

The pension annual allowance sets how much can go into your pensions each tax year. This is £60,000 this tax year (gov.uk).

The limit is per person, not per pot. Your annual allowance applies to all of your private pensions, if you have more than one (gov.uk).

Calculate Your Take-Home Pay →

Carry-forward — using earlier years' unused allowance

The allowance does not strictly expire year by year. You might be able to carry over any annual allowance you did not use from the previous 3 tax years (gov.uk).

That matters most for people with uneven income — a business sale, a bonus year, a partnership distribution — who want to make one large pension contribution against several years of accumulated headroom.

The taper for high earners

Your annual allowance might be lower if you have a high income (gov.uk).

The reduction has a precise double gate. You'll have a reduced ('tapered') annual allowance in the current tax year if both: your 'threshold income' is over £200,000 and your 'adjusted income' is over £260,000 (gov.uk).

Both conditions must hold — income over £200,000 alone does not trigger the taper if adjusted income stays at or under £260,000 (gov.uk). Anyone checking earlier years should note: the threshold income and adjusted income limits are different for earlier tax years (gov.uk).

After flexibly accessing a pension

Your annual allowance might be lower if you have flexibly accessed your pension pot (gov.uk). The lower allowance is called the 'money purchase annual allowance' (gov.uk).

This is the rule that catches people who draw from a pension early and keep contributing afterwards — the room for further tax-relieved saving shrinks once flexible access has happened.

Going over the allowance

If you go over your annual allowance, either you or your pension provider must pay the tax (gov.uk).

Running the numbers against the £60,000 limit

The rules above are short; where people trip is combining them. Three scenarios show how the per-person scope, the carry-forward, and the taper's double gate each behave in practice.

Two pensions, one allowance

An employee pays £35,000 into a workplace scheme during the tax year and a further £30,000 into a personal pension. Each pot is comfortably under £60,000 on its own — but the allowance applies to all of your private pensions together (gov.uk):

• Step 1: Total contributions: £35,000 + £30,000 = £65,000.
• Step 2: Against the £60,000 allowance: £65,000 − £60,000 = £5,000 over.

Unless carry-forward covers the excess, that £5,000 is where the tax charge described above attaches. Checking each pot separately gives the wrong answer; only the combined figure counts.

Carry-forward absorbing a one-off contribution

A company director sells a business and wants to make a single large pension contribution. Suppose her unused allowance from the previous 3 tax years — the window gov.uk permits carrying forward from (gov.uk) — totals £45,000:

• Step 1: Headroom this year: £60,000 current allowance + £45,000 carried forward = £105,000.
• Step 2: A £70,000 contribution: £70,000 − £105,000 leaves £35,000 of headroom intact, so nothing is over the allowance.
• Step 3: The same £70,000 with no carry-forward available would sit £10,000 over the £60,000 limit.

The unused amounts themselves depend on what was contributed in each of those earlier years — and, for higher earners, on whether the taper reduced those years' allowances, since the threshold and adjusted income limits are different for earlier tax years (gov.uk).

The taper's double gate, tested three ways

The taper needs both conditions — threshold income over £200,000 and adjusted income over £260,000 (gov.uk):

• Threshold income £195,000, adjusted income £270,000 → first gate fails (£195,000 ≤ £200,000) → no taper, full £60,000.
• Threshold income £210,000, adjusted income £255,000 → second gate fails (£255,000 ≤ £260,000) → no taper, full £60,000.
• Threshold income £210,000, adjusted income £270,000 → both gates pass → the taper applies. How far the allowance then reduces sits outside this page's quoted source — the scope note below applies.

Where the allowance meets the £100,000 personal allowance taper

Pension contributions also interact with a separate taper: the income tax Personal Allowance falls by £1 for every £2 of adjusted net income over £100,000, reaching zero at £125,140 (gov.uk) — the mechanics are worked through in the 60% tax trap guide. Contributions that bring adjusted net income back under £100,000 restore the £12,570 Personal Allowance.

The annual allowance is the ceiling on that move. Someone earning £120,000 who wants adjusted net income at £100,000 needs £20,000 of contributions — well inside £60,000. Someone at £190,000 would need £90,000, which exceeds the annual allowance unless at least £30,000 of unused allowance is available from the previous 3 tax years (gov.uk). The two rules pull on the same contribution figure, one setting the incentive and the other the limit. Calculate Your Take-Home Pay → at your gross income and again at income minus a planned contribution — the difference shows what the contribution changes at your marginal rate.

A note on scope

This page covers the published HMRC rules: the £60,000 annual allowance (gov.uk), the all-pensions-combined scope (gov.uk), the 3-year carry-forward (gov.uk), the £200,000/£260,000 taper gates (gov.uk), the money purchase annual allowance (gov.uk), and the tax charge on excess (gov.uk).

The tapered allowance's rate of reduction, its floor, and the money purchase allowance's amount sit outside this page's quoted source. UK Calculator provides information and tools, not regulated financial advice — pension contribution decisions interact with income tax, employer schemes and retirement timing, and a regulated financial adviser is the right person to assess any individual case.

Frequently asked questions

How much is the pension annual allowance?

This is £60,000 this tax year (gov.uk).

Does each pension get its own allowance?

No. Your annual allowance applies to all of your private pensions, if you have more than one (gov.uk).

Can I use unused allowance from earlier years?

You might be able to carry over any annual allowance you did not use from the previous 3 tax years (gov.uk).

When does the taper apply?

If both your 'threshold income' is over £200,000 and your 'adjusted income' is over £260,000 (gov.uk).

What happens after I flexibly access a pension?

Your annual allowance might be lower (gov.uk) — the lower allowance is called the 'money purchase annual allowance' (gov.uk).

What if I go over the allowance?

If you go over your annual allowance, either you or your pension provider must pay the tax (gov.uk).

Part of our complete UK Tax Allowances guide →