UK Pension Annual Allowance 2026/27

Worked scenarios

• Adjusted £180,000
  £60,000
  Standard annual allowance £60,000; neither MPAA nor high-earner taper applies.
• Adjusted £260,000 (taper threshold)
  £60,000
  Standard annual allowance £60,000; neither MPAA nor high-earner taper applies.
• Adjusted £300,000
  £40,000
  Adjusted income £300,000 exceeds the £260,000 taper trigger; allowance reduced by £1 per £2 of excess (floor £10,000).
• Adjusted £360,000 (full taper)
  £10,000
  Adjusted income £360,000 exceeds the £260,000 taper trigger; allowance reduced by £1 per £2 of excess (floor £10,000).
• Adjusted £400,000 (floor)
  £10,000
  Adjusted income £400,000 exceeds the £260,000 taper trigger; allowance reduced by £1 per £2 of excess (floor £10,000).
• MPAA triggered
  £10,000
  Money Purchase Annual Allowance is £10,000 once a member has flexibly accessed a DC pension.

How the taper works

1. Compute adjusted income: total taxable income for the year + ALL pension contributions (employer + employee, including salary-sacrifice).
2. Compute threshold income: total taxable income LESS any member pension contributions where Income Tax relief is claimed (RAS or net pay arrangement).
3. If adjusted income > £260,000 AND threshold income > £200,000, the taper applies.
4. Lose £1 of the £60,000 allowance for every £2 of adjusted income above £260,000.
5. The taper stops at a £10,000 floor (reached once adjusted income is £360,000+).

For example: at adjusted income £300,000 with threshold income £290,000, the excess is £40,000 - the taper takes £20,000 off the standard allowance, leaving £40,000 available. At adjusted income £350,000 the taper takes £45,000, leaving £15,000 available. At £360,000+ the floor £10,000 applies.

Frequently asked questions

What is the UK pension annual allowance for 2026/27?

The standard annual allowance is £60,000 in 2026/27. This is the maximum gross pension contribution (employer + employee combined) that can be made each tax year while still receiving Income Tax relief. Contributions above the allowance attract an Annual Allowance Charge at the member's marginal rate.

When does the high-earner taper apply?

The taper applies in 2026/27 when (a) adjusted income exceeds £260,000 AND (b) threshold income exceeds £200,000. Both gates must be cleared for the taper to bite. Once triggered, the £60,000 allowance reduces by £1 for every £2 of adjusted income above £260,000, down to a floor of £10,000 at £360,000 adjusted income.

What is adjusted income vs threshold income?

Adjusted income is your total taxable income with all pension contributions added back (employer + employee, including salary sacrifice). Threshold income is your taxable income LESS any member pension contributions where IT relief is claimed via RAS or net pay. The double-test prevents the taper from biting low-earning members of generous DB schemes.

What is the Money Purchase Annual Allowance (MPAA)?

MPAA is £10,000 in 2026/27 (up from £4,000 before April 2023). It is triggered when a member flexibly accesses a defined-contribution pension - typically by taking a UFPLS or going into income drawdown. Once MPAA bites, the £10,000 cap applies to DC contributions regardless of standard or tapered allowance.

Can I carry forward unused allowance?

Yes - unused allowance from the previous 3 tax years can be carried forward, provided you were a pension scheme member for those years (even if you did not contribute). Carry-forward is not affected by the taper but is reduced if MPAA applied. Request Pension Saving Statements from each scheme to compute the available carry-forward.

What happens if I exceed the allowance?

Contributions above the annual allowance trigger an Annual Allowance Charge equal to the Income Tax that would otherwise be relieved - effectively reversing the tax relief on the excess. The charge is reported via Self Assessment. In some cases the member can ask the scheme to pay the charge from their pension pot ('Scheme Pays') if the charge is over £2,000.