Annual allowance

The amount you’re allowed to pay in across all of your pensions, per tax year before a tax charge might apply. This includes not only money you contribute yourself, but also the tax relief you get from the government as well as anything paid in by your employer.

The standard annual allowance is currently £60,000 per tax year but you can also carry forward allowances you didn’t use in the previous three tax years. If the total amount paid into all of your pensions in a tax year (including tax relief top ups) is more than your total allowance then you will face a tax charge.

If you have a high income (usually over £260,000 p.a.), your annual allowance will be tapered. It will also be lower if you’ve already accessed and taken an income from defined contribution pensions, which triggers the MPAA.