Contributing to your pension

How much can I contribute to my pension?

One of the biggest perks of pensions is earning tax relief on what you pay in. How much tax relief you get is based on your earnings and how much tax you pay.

To get tax relief, you can pay in up to 100 per cent of your earnings each year. Even if you have no earnings, you can still pay in up to £3,600 a year to a pension – that’s £2,880 from you, with the taxman adding £720. You can do this for children too.

But you need to keep an eye on the annual allowance – which is £60,000 per tax year for most people. The annual allowance is a general limit on what can be paid into 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 paid in by government as well as anything paid in by your employer.

Your allowance might be lower if your income is over £260,000 for the year. A different allowance also applies for people who’ve already accessed a pension. There’s more on that below.

How do I get tax relief?

Contributions you make to your AJ Bell pensions will automatically get basic rate tax relief at 20%. We'll collect this for you and pay it into your pension, and this will count as extra money that you can invest.

But if you’re a higher rate taxpayer, you can claim extra tax relief through your self-assessment. Once claimed, this is sent to you directly from HMRC.

In the example below, Alan earns £30,000. He chooses to contribute £8,000 of this to his AJ Bell pension and he'll receive £2,000 in tax relief.

Contributing to your pension - infographic

Just so you’re aware, rates of income tax and bands are different in Scotland. If you’re a Scottish taxpayer, you’ll also need to claim any extra relief from HMRC, like higher rate taxpayers in the rest of the UK.

Can my employer contribute to my pension?

By law, all UK employers need to offer a workplace pension scheme. Workplace schemes allow you, your employer and the government all to pay into your pension.

Your AJ Bell SIPP isn’t a workplace pension, but your employer can contribute to it as well as or instead of contributing to your workplace scheme. Their contributions are paid gross, with no tax deducted. Contributions from your employer count towards your annual allowance, but aren’t restricted by the amount you earn.

Your employer can contribute to your SIPP regularly by Direct Debit. Just ask them to complete a SIPP employer Direct Debit form and send it to us.

More on employer pension contributions

What if I’m self-employed?

If you work for yourself, you probably won’t be auto-enrolled into a company pension scheme. But you can still make personal contributions into a SIPP, and enjoy tax relief.

Also own your business? You could consider making employer contributions into your pension. Employer contributions are deducted from your total profits, meaning they aren’t liable to corporation tax. And as you’re not taking the profit as income now, you’ll lower your personal liability for income tax. Just remember that employer contributions will also count towards your annual allowance.

More on saving into a pension if you’re self-employed

Can I contribute more than my allowance?

If your total pension contributions (anything paid in by you, the tax man and any employer) are over the annual allowance, you might have to pay a tax charge unless you have any ‘carry forward’ available. Carry forward lets you mop up unused allowance from up to the three previous tax years to lower or even eliminate the annual allowance tax charge.

To be able to use carry forward, you must have:

  • Been a member of a pension scheme in each tax year from which you carry forward, even if you didn’t make any contributions.
  • Used up your full annual allowance in the current tax year.
  • Contributed less than your annual allowance in one or more of the last three tax years.
  • Earnings of at least the amount you’re paying in if you’re making personal contributions.

For more information, take a look at our Carry forward guide.

What happens if I have income of more than £260,000?

For high income individuals, the annual allowance of £60,000 is tapered. The maximum reduction is £50,000, meaning that if you have adjusted income of over £360,000, you’ll have an annual allowance of £10,000.

‘Adjusted income’ isn’t just your earnings – it’s all income chargeable to income tax, plus any employer pension contributions paid in the relevant tax year. An income threshold of £200,000 also applies. If you have a threshold income (earnings less personal pension contributions) of less than £200,000 you won’t normally be subject to the tapered annual allowance.

Our taper relief guide provides more information, including examples.

Can I still contribute if I’ve already accessed my pension?

After you've flexibly accessed a pension, you can only contribute up to £10,000 each year to all money purchase pensions, including those with AJ Bell. You also won't be able to carry forward any unused allowance from previous tax years to increase this amount.

Our money purchase annual allowance page gives you more information.

Pension allowance calculator

The HMRC pension allowance calculator will help you work out if you need to pay tax on your pension savings or if you have any unused pension annual allowances that you could carry forward.

Are there any circumstances where I need to avoid paying contributions?

If you previously registered for lifetime allowance protection and made your application after 15 March 2023, you may want to think twice before you or your employer make any pension contributions. Doing so could mean you could lose the lifetime allowance protection. But if you held enhanced protection or any of the types of fixed protection and successfully applied for it before 15 March 2023, you won’t lose it if you or your employer make a pension contribution.  

Remember that the value of investments can change, and you could lose money as well as make it. We don't offer advice, so it's important you understand the risks. If you're not sure, please speak to a financial adviser. These articles are for information purposes only and are not a personal recommendation or advice. Tax treatment depends on your individual circumstances and rules may change. Pension rules apply.


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Our SIPP gives you complete flexibility on how much you save for retirement, and when and where your pot is invested.

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