Answers · UK 2025/26

What is the pension annual allowance for high earners in the UK?

High earners face a tapered annual allowance. The standard £60,000 allowance reduces by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000. If you have flexibly accessed a pension, the Money Purchase Annual Allowance (MPAA) of £10,000 applies instead.

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For 2026/27 the standard pension annual allowance is £60,000, meaning the total of your own contributions and employer contributions to all pension schemes cannot exceed this amount without triggering an annual allowance charge. For high earners, the tapered annual allowance reduces this limit. Tapering applies when your threshold income exceeds £200,000 and your adjusted income exceeds £260,000. Threshold income is broadly your income before pension contributions. Adjusted income adds back employer pension contributions. If both thresholds are met, the annual allowance is reduced by £1 for every £2 of adjusted income above £260,000. The minimum tapered allowance is £10,000, reached when adjusted income hits £360,000. For example: adjusted income of £300,000 means the excess above £260,000 is £40,000, so the allowance is reduced by £20,000, from £60,000 to £40,000. It is important to note that employer contributions count toward the annual allowance, so a generous employer contribution can inadvertently push a high earner over their tapered limit. Carry forward of unused allowances from the previous 3 years can help -- but the amount you can carry forward is based on the tapered allowance in each previous year, not the standard allowance. A separate limit, the Money Purchase Annual Allowance (MPAA), applies if you have flexibly accessed your defined contribution pension (for example, by taking income drawdown). The MPAA is £10,000 and replaces the standard annual allowance for money purchase (defined contribution) contributions. The MPAA cannot be increased by carry forward. If you exceed the annual allowance, you pay an annual allowance charge at your marginal rate of Income Tax on the excess. The charge is declared on your Self Assessment tax return. Use a pension calculator and seek advice if your income approaches these thresholds.