Pension tax relief is generous, but it comes with limits. These are the allowances and dates that matter most for 2026/27 and the next few years.
| Allowance | 2026/27 |
|---|---|
| Annual allowance | £60,000 |
| Tapered annual allowance: threshold income / adjusted income | £200,000 / £260,000 |
| Minimum tapered annual allowance | £10,000 |
| Money purchase annual allowance | £10,000 |
| Lump sum allowance | £268,275 |
| Lump sum and death benefit allowance | £1,073,100 |
| Full new State Pension | £241.30 a week |
| Normal minimum pension age | 55 |
The annual allowance
You can pay up to £60,000 a year into pensions (including employer contributions) with tax relief, or up to 100% of your earnings if lower. Personal contributions without earnings are limited to £3,600 gross.
Carry forward lets you use unused allowance from the previous three tax years, as long as you were a member of a registered pension scheme in those years. It’s especially useful for business owners and anyone with a one-off bonus.
The tapered annual allowance
If your threshold income is over £200,000 and your adjusted income (which includes employer contributions) is over £260,000, your annual allowance falls by £1 for every £2 above £260,000, down to a minimum of £10,000.
The money purchase annual allowance
Once you take taxable income flexibly from a defined contribution pension, for example through drawdown or an uncrystallised lump sum, future contributions to defined contribution pensions are limited to £10,000 a year. Taking only your tax-free cash, or buying a lifetime annuity, doesn’t trigger it.
Tax-free cash
Most people can take 25% of each pension tax-free, up to a total of £268,275 across all their pensions (the lump sum allowance). Some people have higher protected amounts. The lump sum and death benefit allowance of £1,073,100 limits tax-free lump sums paid in life and on death before 75.
Dates to plan around
| Date | Change |
|---|---|
| 2026 to 2028 | State Pension age rises from 66 to 67 |
| 6 April 2027 | Most unused pensions count towards inheritance tax |
| 6 April 2028 | Normal minimum pension age rises from 55 to 57 |
| 6 April 2029 | Only the first £2,000 a year of salary-sacrificed pension contributions stays free of National Insurance |
What it means at each stage
- In your 40s and early 50s: this is often the most valuable time to contribute. Check carry forward, and whether salary sacrifice above £2,000 is still worth it after April 2029.
- Approaching retirement: plan the order you draw from pensions, ISAs and cash, and be careful not to trigger the money purchase annual allowance while you’re still saving.
- In retirement: with pensions joining the estate from 2027, look again at which pots to spend first and how much to leave.
Rules depend on your circumstances and can change. We’ll check how each one applies to you before recommending anything.
Sources
- Tax on your private pension contributions: annual allowance (GOV.UK)
- Your State Pension explained (DWP)
- Changes to salary sacrifice for pensions from April 2029 (HM Treasury)
- Inheritance Tax on pensions: technical note (HMRC)
This guide is general information, not personal advice, and reflects our understanding of the rules on 31 October 2026. Tax rules can change and their effect depends on your circumstances.