The annual allowance is the maximum amount that can be contributed to your pensions in a tax year while still benefiting from tax relief. For most individuals, this limit is currently £60,000 or 100% of your UK earnings, whichever is lower.
Pension allowance rules can be complex, especially if you have a high income or have already started taking money from a pension. If you're unsure about your Annual Allowance or need more detailed guidance, we recommend contacting MoneyHelper for a free Pension Wise appointment, or that you seek professional financial advice.
📄 Note
If your total pension contributions in a tax year exceed your Annual Allowance you may face an Annual Allowance tax charge from HMRC.
What counts towards your Annual Allowance?
This £60,000 limit includes:
- Your personal contributions.
- Any contributions made by your employer.
- The tax relief added by the government (remember, basic rate tax relief acts as a 25% top-up on your personal contribution!).
What is the impact of your UK Earnings?
Your personal pension contributions can only receive tax relief up to 100% of your UK relevant earnings for that tax year. For instance, if your earnings are £30,000, even though the standard annual allowance might be £60,000, the most you can contribute and receive tax relief on is £30,000.
What if you have no UK Earnings?
If you don't have any UK relevant earnings in a tax year, you can still contribute up to £3,600 gross (£2,880 net for personal contributions, plus basic rate tax relief).