Rates & allowances
Pensions — UK rates and thresholds
Annual allowance, lump sum allowance and tapering thresholds.
2026/27
Pensions
- Annual allowance£60,000
- Tapered minimum£10,000 For income > £360k adjusted
- Money Purchase Annual Allowance£10,000
- Lump Sum Allowance (LSA)£268,275
- Lump Sum and Death Benefit Allowance£1,073,100
- New State Pension (per week)£241.3
- Basic State Pension (per week)£184.9
- Auto-enrolment trigger£10,000
- Qualifying earnings band — lower£6,240
- Qualifying earnings band — upper£50,270
Pension allowances and tax relief
Pension contributions receive tax relief, making them one of the most efficient ways to save. The annual allowance caps how much can be contributed tax-efficiently each year (with tapering for high earners and carry-forward of unused allowance), and there are rules on how and when benefits can be drawn. The tables above show the current allowances.
Pensions interact with income tax, the £100,000 allowance taper and inheritance planning, so they are worth coordinating with your wider tax position — something we help with.
The annual allowance and how it tapers
Contributions attract tax relief up to an annual allowance, and unused allowance from the previous three years can usually be carried forward — which is what makes a large one-off contribution possible after a good year.
For higher earners the allowance tapers down, and the calculation uses two separate income measures that both have to be worked out before you know your own limit. Employer contributions count towards it. Exceeding the allowance produces a charge that removes the relief, so for anyone near the taper it is worth calculating before contributing rather than after.
Why pensions do more than one thing
A personal contribution extends your basic-rate band. That means it can reduce the rate on dividends, reduce the rate on a capital gain, restore some of a tapered personal allowance, and reduce or remove the high income child benefit charge — all from the same payment. For someone caught by more than one of those at once, the effective relief can be far higher than the headline rate.
Frequently asked
How much can I pay into a pension tax-efficiently?+
Up to the annual allowance, subject to your earnings and any taper for high income. Unused allowance from earlier years may often be carried forward.
Do pension contributions cut my tax?+
Yes — they receive tax relief at your marginal rate and can help retain the personal allowance and child benefit. We can model the effect.
How much can I put into a pension?+
Up to the annual allowance, plus unused allowance carried forward from the previous three years, and limited by your earnings for personal contributions. High earners have a tapered allowance based on two separate income measures, and employer contributions count towards it — so the limit is personal and worth calculating before paying in.
Does a pension contribution help with anything besides income tax?+
Often several things at once. It extends your basic-rate band, which can lower the rate on dividends and on capital gains, restore part of a tapered personal allowance, and reduce the high income child benefit charge. Where more than one applies, the effective relief is much larger than the headline rate.
Rates in context
Knowing the rate is not the same as knowing the bill.
Thresholds interact — allowances taper, reliefs stack, and the order you take income in changes the total. We plan for that.
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