Tax on your private pension contributions

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Annual allowance

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax.

You’ll only pay tax if you go above the annual allowance. This is £40,000 this tax year.

What counts towards the annual allowance

Your annual allowance applies to all of your private pensions, if you have more than one. This includes:

If you use all of your annual allowance for the current tax year

You might be able to carry over any annual allowance you did not use from the previous 3 tax years.

When your annual allowance is lower than £40,000

Your annual allowance might be lower if you have:

  • flexibly accessed your pension pot
  • a high income

If you flexibly access your pension

Your annual allowance might be lower if you flexibly access your pension. For example, this could include taking:

The lower allowance is called the ‘money purchase annual allowance’.

If you have a high income

You’ll have a reduced (‘tapered’) annual allowance in the current tax year if both:

  • your ‘threshold income’ is over £200,000
  • your ‘adjusted income’ is over £240,000

The threshold income and adjusted income limits are different for earlier tax years.

Work out your reduced annual allowance.

If you go above the annual allowance

You’ll get a statement from your pension provider telling you if you go above the annual allowance in their scheme. If you’re in more than one pension scheme, ask each pension provider for statements.

You can also use a calculator to work out how much you’ve gone above the allowance.

If you go over your annual allowance, either you or your pension provider must pay the tax.

Fill in the ‘Pension savings tax charges’ section of a Self Assessment tax return to tell HMRC about the tax, even if your pension provider pays all or part of it. You’ll need form SA101 if you’re using a paper form.

You can still claim tax relief for pension contributions on your Self Assessment tax return if you’re above the annual allowance.

HMRC does not tax anyone for going over their annual allowance in a tax year if they:

  • retired and took all their pension pots because of serious ill health
  • died