Pension Annual Allowance Calculator
Calculate your pension contribution headroom for 2026-27. Enter your earnings, contributions, and any unused allowance from the previous three years to see whether you face an annual allowance charge — including the tapered allowance for high earners above £260,000.
Reviewed by Richard Ross · Last updated April 2026
How Pension Annual Allowance Calculator works
Pension annual allowance for 2026-27
The annual allowance (AA) is the maximum you and your employer can contribute to your pension each year without incurring a tax charge. For 2026-27: £60,000 or 100% of earnings (whichever is lower). Contributions above the AA are subject to an annual allowance charge at your marginal income tax rate — effectively cancelling out the tax relief on the excess. The AA covers all contributions: employee, employer, salary sacrifice, and any third-party contributions.
Worked example: £80,000 salary with £15,000 total contributions
On an £80,000 salary, your annual allowance is £60,000 (the standard limit, since earnings exceed £60,000). If total contributions this year are £15,000 and you have no carry-forward, your remaining headroom is £45,000. You could increase contributions by up to £45,000 before triggering a charge. If contributions were £70,000 with £5,000 carry-forward, total headroom would be £65,000 — meaning £5,000 excess and an annual allowance charge of roughly £2,000 (at 40% higher rate).
Carry-forward from previous years
You can carry forward unused annual allowance from the previous three tax years. To use carry-forward: you must have been a pension member in those years, you must fully use the current year's AA first, and you must have sufficient earnings in the current year. With maximum carry-forward, total available headroom could reach up to £240,000 (4 × £60,000). This is especially useful for those making one-off large contributions — for example, from a property sale, bonus, or inheritance.
Tapered annual allowance for high earners
The tapered AA applies if your threshold income exceeds £200,000 AND adjusted income exceeds £260,000 (2026-27). The AA is reduced by £1 for every £2 of adjusted income above £260,000, to a minimum of £10,000. Adjusted income includes employer contributions. For example, if your adjusted income is £300,000, the taper reduces the AA by £20,000 (half of £40,000 excess) to £40,000. At £360,000 or above, the AA falls to the minimum £10,000. Salary sacrifice reduces adjusted income and can partially or fully offset the taper.
Money purchase annual allowance (MPAA)
Once you access pension savings flexibly (flexi-access drawdown or take an uncrystallised funds pension lump sum), the MPAA of £10,000 applies to future defined contribution pension contributions. The MPAA does not allow carry-forward and cannot be increased. It does not affect defined benefit pension accrual. This is an important consideration for those who may need to access pension savings early while still working and contributing.
History of annual allowance changes
The annual allowance has changed significantly over the years: it was £255,000 in 2010-11, reduced to £50,000 in 2011-12, then to £40,000 in 2014-15, where it remained until April 2023 when it was increased to £60,000. This increase was part of the same pension reforms that abolished the lifetime allowance from April 2024. The increase from £40,000 to £60,000 particularly benefits higher earners and those with large employer contributions who were previously constrained, and it re-opened the opportunity to use carry-forward at higher levels than had been possible since 2014.
Annual allowance for defined benefit pension members
For members of defined benefit (final salary) pension schemes, the pension input amount is calculated differently. Rather than using actual contributions, HMRC uses the "pension input amount" formula: (annual pension accrual × 16) + any lump sum accrual. For example, if your final salary pension increases by £2,000/year in a given tax year, the pension input amount is £32,000 (£2,000 × 16). This can easily exceed the standard £60,000 annual allowance for those with rapid salary growth or long service, making the annual allowance calculator especially important for senior public sector workers and NHS staff.
Reporting an annual allowance breach
If your pension contributions exceed your annual allowance (including carry-forward), you must report this on your Self Assessment tax return. Your pension scheme may be able to pay the charge on your behalf (known as "scheme pays") if the excess is at least £2,000 and your total contributions exceed the standard allowance. Using scheme pays reduces your future pension entitlement but avoids a cash charge from HMRC. Sources: HMRC — Pension annual allowance (gov.uk), HMRC — Tax on your pension contributions (gov.uk).
NHS pension and the annual allowance
NHS pension members — particularly consultants, GPs, and senior clinical managers — have historically been the most affected by annual allowance charges because the NHS pension is a defined benefit scheme. HMRC calculates the pension input amount using the formula (annual pension accrual × 16) + any lump sum accrual, not actual cash contributions. A consultant whose pensionable pay rises by £4,000 in a single year has a pension input amount of £64,000 — exceeding the £60,000 annual allowance by £4,000 — without making a single voluntary contribution. The charge would be £1,600 at 40% marginal rate. The NHS Pension Scheme offers Scheme Pays to cover the charge (reducing future pension benefits) where the excess is at least £2,000 and total contributions exceed the standard £60,000 limit. NHS England has also made compensation arrangements available to certain clinicians facing repeated charges, though eligibility is limited. NHS pension members who receive a pension savings statement showing a pension input above the annual allowance should seek independent financial advice before deciding between Scheme Pays, additional carry-forward, or adjusting their pension accrual rate.
Annual allowance in the year you retire
In the tax year you retire and stop contributing, the full annual allowance applies — it is not pro-rated. All contributions made up to the retirement date, including employer contributions up to that point, count against the allowance for that year. This creates two specific planning points: first, the year of retirement is often the optimal moment to deploy any unused carry-forward, since you may have three years of generous unused allowances and potentially a large taxable income figure (from salary, bonuses, or a redundancy payment) that makes a large pension contribution efficient. Second, if you access pension benefits flexibly in the same tax year as your last contributions — for example by entering flexi-access drawdown on the same day as retirement — the MPAA of £10,000 is triggered. Any contributions made after that trigger point, including from a part-time role if you return to work, are subject to the £10,000 limit rather than the standard £60,000.
Frequently asked questions
What is the pension annual allowance for 2026-27?
The annual allowance is £60,000 (or 100% of earnings if lower) for 2026-27, unchanged from 2025-26 and 2024-25. This covers all contributions to defined contribution pensions (employee + employer + salary sacrifice). Exceeding it triggers a tax charge at your marginal rate.
Can I contribute more than £60,000 to my pension?
Yes, by using carry-forward from previous years. If you had unused allowance in the past 3 tax years, you can add that to this year's £60,000. Total headroom with maximum carry-forward could be up to £240,000 (4 × £60,000). You must have been a pension member in those prior years and have sufficient earnings in the current year.
Who is affected by the tapered annual allowance?
High earners whose threshold income exceeds £200,000 AND adjusted income exceeds £260,000. Threshold income is broadly net employment income; adjusted income adds back all pension contributions. The taper reduces the AA by £1 for every £2 above £260,000, down to a minimum of £10,000 (at £360,000+). If in doubt, speak to a financial adviser.
What is the annual allowance charge?
An additional income tax charge on pension contributions above the annual allowance (including carry-forward). The charge is at your marginal rate — 20%, 40%, or 45%. It effectively cancels out the tax relief on the excess contributions. For example, £5,000 excess for a higher rate taxpayer would trigger a charge of £2,000.
Does salary sacrifice count towards my annual allowance?
Yes. Salary sacrifice pension contributions are treated as employer contributions, and they count towards the annual allowance in full. If you sacrifice £20,000 and your employer contributes an additional £5,000, the total £25,000 counts against your £60,000 annual allowance. Salary sacrifice does, however, reduce your adjusted income — which can help avoid or reduce the tapered allowance.
What is the money purchase annual allowance (MPAA)?
The MPAA is a reduced annual allowance of £10,000 that applies after you access defined contribution pension savings flexibly — for example through flexi-access drawdown. The MPAA does not allow carry-forward. It only affects defined contribution contributions; defined benefit accrual continues under the standard annual allowance.
Was the annual allowance increased in 2023?
Yes. The annual allowance rose from £40,000 to £60,000 on 6 April 2023 as part of the pension reforms announced in the Spring Budget 2023. The same reforms abolished the lifetime allowance from 6 April 2024. These changes were designed to encourage senior professionals — particularly NHS consultants — to remain in work rather than retire early to avoid pension charges.
How do defined benefit pensions calculate the annual allowance?
For defined benefit (final salary) pensions, HMRC uses the "pension input amount" formula rather than actual contributions: (annual pension accrual × 16) + any lump sum accrual. A £2,000/year pension increase equals a £32,000 pension input. This can easily breach the £60,000 annual allowance for those with rapid salary growth or promotions.
How do I report an annual allowance breach to HMRC?
Report the breach on your Self Assessment tax return. Your pension scheme can pay the charge on your behalf ("scheme pays") if the excess is at least £2,000 and total contributions exceed the standard allowance. Using scheme pays reduces your future pension entitlement but avoids a cash charge from HMRC.
Can I use carry-forward if I was not working in a previous year?
You must have been a member of a registered pension scheme in each year you wish to carry forward from — but you do not need to have been working. Unused allowance from a year when you were a pension member with no contributions can still be carried forward. However, your current year earnings must be sufficient to cover the total contribution you wish to make.
What is the pension annual allowance for NHS staff?
The same £60,000 standard annual allowance applies to NHS pension members as everyone else — but because the NHS pension is a defined benefit scheme, the pension input amount is calculated as annual pension accrual × 16, not actual cash contributions. A consultant whose pensionable pay rises by £4,000 in a year has a pension input of £64,000, breaching the allowance by £4,000. NHS members who receive a pension savings statement showing an excess should consider Scheme Pays or speak to an independent financial adviser.
Can I use carry-forward in the year I start drawing my pension?
If you access your pension flexibly — for example through flexi-access drawdown — the money purchase annual allowance (MPAA) of £10,000 applies to future defined contribution contributions from that point. You cannot use carry-forward to increase the MPAA. However, contributions made before the flexible access trigger in the same tax year are assessed against the standard annual allowance, and carry-forward may still be applied to that pre-trigger period. The interaction is complex; independent financial advice is recommended if you are contributing and drawing in the same year.
Does the state pension count towards the annual allowance?
No. The state pension is paid by the government and is not a contribution to a registered pension scheme — it does not count towards the annual allowance. Only contributions to registered pension schemes (workplace pensions, SIPPs, personal pensions, and defined benefit accrual) are included in the pension input amount. State pension income is, however, subject to income tax in the usual way once it exceeds your personal allowance.
If I change employers mid-year, do pension contributions from both jobs count?
Yes. All pension contributions made in a tax year count towards your annual allowance regardless of how many employers or schemes are involved. If your first employer contributed £20,000 and your second employer contributed £25,000, with £10,000 of your own contributions, the total pension input is £55,000. Each scheme will issue a pension savings statement only if its own contributions exceed the standard annual allowance, so you must add figures across all schemes yourself — or use this calculator — to see the combined position.
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This calculator provides estimates for informational purposes only. It is not a substitute for personalised pension or financial advice. Speak to a regulated financial adviser before making pension decisions.