How Much Can You Contribute to a Pension: £60,000 Cap and Taper

For the 2025/26 tax year, you can contribute up to £60,000 across all your pensions combined and still get full tax relief. That figure — the annual allowance — is the headline answer to how much you can contribute to a pension, but three things can change it: your earnings, your income level, and whether you’ve already started drawing from a pension flexibly.¹

What Counts Toward the £60,000

The annual allowance covers everything paid into your pensions during the tax year: your own contributions, anything your employer pays in, and contributions from anyone else on your behalf.² If you have more than one pension, the £60,000 applies to the total across all of them, not to each one separately.

For a defined contribution (money purchase) pension, the amount that counts is simply the cash paid in. For a defined benefit (final salary) pension, it’s the increase in the value of your promised benefits over the year rather than the cash paid in. Your scheme administrator will normally tell you your pension input amount for a defined benefit scheme.³

Contributions count on a gross basis. If you pay £800 into a relief-at-source scheme, your provider claims £200 from HMRC and £1,000 counts against your allowance.⁴

You Also Can’t Get Relief Above Your Earnings

The £60,000 allowance sits on top of a separate rule: you only get tax relief on personal contributions up to 100% of your relevant UK earnings for the year.⁴ Relevant earnings include wages, salary, bonuses, commission, and self-employment profits. Rental income, investment returns, and dividends don’t count.

So if you earn £35,000, your own contributions attract relief up to £35,000, not the full £60,000. Employer contributions are not restricted by the earnings cap, though they still count toward the £60,000 annual allowance.

If you have little or no income, you can still contribute up to £3,600 gross a year — £2,880 from you, topped up by £720 in basic-rate relief from HMRC. This applies even if you aren’t working. It’s your responsibility to make sure you don’t claim relief on more than 100% of your earnings; HMRC can ask you to repay any excess.⁴

High Earners: The Tapered Annual Allowance

If your income is high, the £60,000 allowance can be reduced. Whether tapering bites depends on two figures:

Threshold income — broadly your total taxable income minus personal pension contributions. If this is £200,000 or less, tapering does not apply, regardless of your other figures.
Adjusted income — your threshold income plus employer pension contributions and any increase in defined benefit rights. Tapering only kicks in if this exceeds £260,000 and your threshold income is above £200,000.

Above those points, your annual allowance drops by £1 for every £2 of adjusted income over £260,000. The floor is £10,000, reached at an adjusted income of £360,000 or more.⁵ Someone with adjusted income of £300,000 would lose £20,000 of allowance (half of the £40,000 excess), leaving £40,000.¹

Because adjusted income includes employer contributions, a generous employer contribution can push you into tapering even when your salary alone wouldn’t. Tapering also reduces the allowance you can carry forward from that year.

If You’ve Already Drawn From a Pension

Once you start flexibly withdrawing from a defined contribution pension, a permanent lower limit called the Money Purchase Annual Allowance (MPAA) replaces the £60,000 for future defined contribution savings. The MPAA is £10,000 for 2025/26.¹

Actions that trigger the MPAA include taking income from a flexi-access drawdown fund, receiving an uncrystallised funds pension lump sum, and receiving payments from a flexible annuity. Taking only the 25% tax-free lump sum, buying a standard lifetime annuity, receiving a defined benefit pension, and staying within the limits of capped drawdown do not trigger it.

Once the MPAA applies, you also lose the ability to carry forward unused allowance for your defined contribution savings. You must tell your other pension providers within 91 days of the trigger event.²

If you have defined benefit savings as well, those are tested against a separate alternative annual allowance of £50,000 for 2025/26. Combined with the £10,000 MPAA, the total still comes to £60,000. If tapering also applies to you, the alternative allowance is reduced accordingly.⁶

Using Unused Allowance From Earlier Years

If you didn’t use your full annual allowance in the previous three tax years, you can carry the unused amount forward and add it to the current year’s £60,000. You need to have been a member of a registered pension scheme in each of those earlier years for the allowance from that year to be available.⁷

The current year’s allowance is used first. Only once you exceed £60,000 for the current year do earlier amounts come into play, starting with the oldest of the three years and working forward. If you contributed only £30,000 in each of the last three years when the allowance was £60,000, you’d have £90,000 of unused allowance to add to this year’s £60,000, giving a headroom of £150,000.

The earnings cap still applies. You can only get relief on contributions up to 100% of your earnings in the current year — so if you earn £80,000, you can contribute £80,000 with carry forward, not the full £150,000. Carry forward is often used by self-employed people with uneven income and by employees who receive a large one-off bonus.

What Happens If You Go Over

Contributions above your available allowance trigger an annual allowance charge on the excess, calculated at your marginal income tax rate. That means up to 45% for additional-rate taxpayers, and the effect is to claw back the tax relief you received on the amount over the limit.¹

You report the charge through Self Assessment in the “Pension savings tax charges” section (form SA101 if you file on paper). The online deadline is 31 January after the end of the tax year, so 31 January 2027 for 2025/26.²

You don’t always have to pay the charge from your own money. Your pension scheme must pay some or all of it from your pension fund if you ask, provided all of these apply:

Your savings in that particular scheme exceeded the £60,000 annual allowance for the tax year.
Your total annual allowance charge is more than £2,000.
You notify the scheme by 31 July of the year after the following tax year — for 2025/26, that means 31 July 2028.

This is known as mandatory scheme pays. If the charge is £2,000 or less, the scheme can pay it voluntarily but isn’t required to. Either way, your future benefits are reduced to reflect the payment, you still report the charge on your Self Assessment return, and once you ask a scheme to pay, the decision can’t be reversed.⁸

A Separate Limit on Tax-Free Cash

The rules above are about how much you can pay in. A different set of limits caps how much you can take out tax-free. The Lump Sum Allowance limits your lifetime tax-free cash to £268,275, and the Lump Sum and Death Benefit Allowance limits combined tax-free lump sums paid to you and to your beneficiaries to £1,073,100. Any amount above either limit is taxed as income.⁹ If you registered for protection before 6 April 2024, your figures may be higher.

1
GOV.UK. Pension Schemes Rates
2
GOV.UK. Tax on Your Private Pension Contributions: Annual Allowance
3
GOV.UK. HS345 Pension Savings – Tax Charges (2025)
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GOV.UK. Tax on Your Private Pension Contributions: Tax Relief
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GOV.UK. Work Out Your Reduced (Tapered) Annual Allowance
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GOV.UK. Check if You’ve Gone Above the Money Purchase Annual Allowance
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GOV.UK. Check if You Have Unused Annual Allowances on Your Pension Savings
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GOV.UK. Who Must Pay the Pensions Annual Allowance Tax Charge
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GOV.UK. Tax on Your Private Pension Contributions: Lump Sum Allowance