Pension annual allowance in 2026/27
Most people can contribute to pensions with Income Tax relief within an annual allowance. For 2026/27 the standard allowance is £60,000. Go over it (after carry-forward) and an annual allowance charge can apply. High earners may see the allowance tapered. People who have flexibly accessed defined contribution benefits may instead face the Money Purchase Annual Allowance (MPAA).
Taper for high earners
Taper can apply when threshold income exceeds £200,000 and adjusted income exceeds £260,000. The allowance then falls by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000. Threshold and adjusted income have technical definitions — employer contributions usually sit inside adjusted income, which surprises people who only look at salary.
MPAA
If you have flexibly accessed a money-purchase pension, the MPAA of £10,000 may cap how much you can contribute to money-purchase arrangements with relief. Triggering MPAA is hard to reverse. Take advice before first flexible access if you still plan large contributions.
What this calculator estimates
Enter threshold income, adjusted income, pension inputs for the year, and tick MPAA if it already applies. We show a simplified annual allowance, whether taper appears to apply, and headroom versus contributions. Carry-forward of unused allowance from the previous three years is not modelled.
Link to the £100k tax trap
Pension contributions can reduce adjusted net income for Personal Allowance taper and HICBC, which is why high earners model contributions carefully. The annual allowance and its own taper are the brake pedal — more contribution is not always better.
Worked example
Adjusted income £300,000 and threshold income £220,000 → taper applies. Excess above £260,000 is £40,000 → allowance reduced by £20,000 to £40,000 (above the £10,000 floor). Contributions of £45,000 would suggest a £5,000 excess before carry-forward.
Limitations
Scheme pays elections, dual AA/MPAA calculations, and overseas transfer rules are out of scope. Educational only; not tax advice.
Threshold income versus adjusted income
Threshold income is the gate. If it does not exceed £200,000, taper does not apply even if adjusted income looks high. Adjusted income then measures how far the allowance falls once the gate opens. Employer contributions commonly inflate adjusted income, which is why senior employees with big employer pensions hit taper sooner than they expect.
Carry-forward in outline
Unused annual allowance from the previous three tax years may be carried forward if you were a pension scheme member. This calculator shows a single-year headroom figure without carry-forward — so a displayed “excess” might still be covered after a proper three-year review.
Scheme pays
Some members meet an annual allowance charge from scheme benefits rather than cash. That election has deadlines and effects on future benefits. It is outside this tool.
Defined benefit growth
DB pension input amounts use a formula based on benefit growth, not just cash contributions. High DB accruals can consume annual allowance silently. Request pension savings statements if you are a DB member near limits.
Planning alongside the tax trap
Escaping the £100k personal allowance taper with large contributions is popular advice online. Pair it with this annual allowance check so you do not create an AA charge while solving a 60% effective rate problem.
Documentation
Keep total contributions, employer amounts, flexible access flags, and pension savings statements together. When HMRC asks, organised PDFs beat memory.
Recycling and other advanced rules
Pension recycling rules can apply when tax-free lump sums are followed by unusually large contributions. They are rare for ordinary savers but relevant to sophisticated planning. This calculator does not test recycling.
Overseas citizens and UK relief
Eligibility for UK relief on pension contributions depends on residence and scheme status. Non-residents sometimes continue UK schemes with limits. Seek specialist advice before large transfers or contributions across borders.
End-of-year checklist
- Request pension savings statements.
- Estimate threshold and adjusted income.
- Check MPAA status.
- Compute carry-forward if needed.
- Decide contributions before 5 April.
Salary sacrifice and AA
Salary sacrifice reduces cash pay and can change threshold income tests, while employer contributions still swell adjusted income. The net taper outcome needs a joined-up model. Payroll teams and advisers should share the same assumptions.
Lifetime that still matters
Even after lifetime allowance charge removal, providers may talk about lump sum allowances and related limits. Do not confuse those with the annual allowance taper discussed on this page.
Who should care most
Senior employees with large employer contributions, partners in LLPs, and business owners making big personal contributions near year-end are the classic AA audience. Basic-rate employees contributing modest percentages rarely meet taper. Still, a sudden bonus plus employer top-up can surprise people who never read pension statements.
Next actions
If this calculator shows a tight headroom, request formal statements and speak to a regulated adviser before dumping a large March contribution solely to escape the £100k trap.
Sources: Pension schemes rates; Annual allowance guidance.