Annual Allowance

Every pound paid into your pensions in a tax year, from you, your employer, and tax relief combined, counts towards a single limit called the annual allowance. For 2026/27 the standard figure is £60,000, and for most savers it is comfortably out of reach. But the rules have real teeth for three overlapping groups: very high earners, whose allowance can be gradually tapered down to as little as £10,000; anyone who has already flexibly accessed a defined contribution pension, whose allowance drops permanently to £10,000 under the money purchase annual allowance; and anyone, including many senior public sector and NHS professionals, whose defined benefit pension growth alone can unexpectedly push them over the limit in a single year. Go over your available allowance and you may face an annual allowance charge, effectively clawing back the tax relief on the excess at your marginal rate.

The four guides below take each part of this in turn: what the standard allowance covers and how it is used up, how tapering works for high earners, what triggers the money purchase annual allowance and why it catches people off guard, and exactly what happens, and what it costs, if you exceed your allowance. Start with whichever is most relevant to your own situation, or work through them in order if you are new to the topic.