Annual Allowance 2026 Updates HMRC: Pension Contribution Limits and Tapering
TL;DR:
UK Pension Allowances 2026-27
| Allowance | 2026-27 amount | Status | Source |
|---|---|---|---|
| Standard Annual Allowance | £60,000 | Unchanged from 2023-24 | HMRC PTM051000 |
| Money Purchase Annual Allowance (MPAA) | £10,000 | Unchanged from 2023-24 | HMRC PTM056000 |
| Tapered AA - minimum | £10,000 | Unchanged from 2023-24 | HMRC PTM057100 |
| Tapering threshold income | £200,000 | Unchanged from 2023-24 | HMRC PTM057100 |
| Tapering adjusted income start | £260,000 | Unchanged from 2023-24 | HMRC PTM057100 |
| Lump Sum Allowance | £268,275 | From 6 April 2024 | HMRC PTM170000 |
| Lump Sum and Death Benefit Allowance | £1,073,100 | From 6 April 2024 | HMRC PTM170000 |
Allowance values verified via HMRC Pensions Tax Manual sections cited above, May 2026.
How the Annual Allowance Works
The Annual Allowance is the maximum amount of pension contributions per tax year that can receive tax relief. It includes employer contributions, employee contributions, and (for defined benefit schemes) the deemed contribution value of accrued benefits. Contributions in excess of the allowance trigger an Annual Allowance charge at the saver's marginal income tax rate.
Tax relief is given automatically on personal contributions: basic-rate (20%) at source via "relief at source" or net pay arrangements; higher-rate (40%) and additional-rate (45%) by claim through Self Assessment. Employer contributions are paid gross and are not subject to PAYE income tax in the employee's hands.
Tapering for High Earners
Two income measures determine if tapering applies: "threshold income" (broadly all taxable income excluding pension contributions) and "adjusted income" (taxable income plus all pension contributions including employer). Tapering applies only when threshold income exceeds £200,000 AND adjusted income exceeds £260,000.
Where both conditions met, the £60,000 Annual Allowance reduces by £1 for every £2 of adjusted income above £260,000, with a minimum of £10,000 reached at adjusted income of £360,000. Worked example: adjusted income £300,000 = £40,000 above £260,000, taper £20,000, allowance reduces to £40,000.
Carry Forward of Unused Allowance
Unused Annual Allowance from the previous 3 tax years can be carried forward. The current year's allowance is used first; carry-forward applies in chronological order (oldest first). Carry-forward requires having been a member of a registered pension scheme during the years from which allowance is being carried forward, even if no contributions were made in those years.
Maximum potential contribution in 2026-27 using full carry forward from 2023-24, 2024-25, and 2025-26: £60,000 (current) + 3 × £60,000 (3 prior years at standard AA) = £240,000. Actual carry-forward varies by individual contribution history. The Pensions Tax Manual section PTM055000 sets out the detailed rules.
FAQ: Annual Allowance 2026 HMRC
What is the pension Annual Allowance for 2026-27?
£60,000 standard Annual Allowance, unchanged from 2023-24. The Money Purchase Annual Allowance for those who have flexibly accessed pension benefits is £10,000. Tapering applies for very high earners with adjusted income above £260,000.
Has the Lifetime Allowance been abolished?
Yes. The Lifetime Allowance was abolished from 6 April 2024. It is replaced by two new allowances: the Lump Sum Allowance (£268,275, the maximum tax-free lump sum) and the Lump Sum and Death Benefit Allowance (£1,073,100, the maximum tax-free amount including death benefits).
Can I contribute more than my income to a pension?
For tax relief purposes, personal contributions are limited to the higher of £3,600 gross or 100% of relevant UK earnings in the tax year. Employer contributions are not subject to this limit (only the Annual Allowance). Earnings below the £3,600 threshold still allow a £3,600 gross contribution with tax relief.
Last reviewed: May 2026. Allowances verified via HMRC Pensions Tax Manual sections PTM051000, PTM055000, PTM056000, PTM057100, PTM170000.
