Pension Annual Allowance
Calculator 2025/26
Most annual allowance calculators make you work out “threshold income” and “adjusted income” yourself — the two figures that determine whether tapering applies. This one calculates them for you from plain-English inputs: salary, bonus, employer contributions, and personal contributions. Includes carry forward from 2022/23, 2023/24, and 2024/25.
The annual allowance — what it is and why it matters
The annual allowance (AA) is the maximum amount that can be paid into or built up across all your pension schemes in a tax year before a tax charge applies. It’s not a limit on what you can pay — it’s a limit on how much can receive tax relief. Exceed it and HMRC claws back the excess relief at your marginal rate.
For 2025/26, the standard annual allowance is £60,000. This includes all contributions: your own personal contributions, your employer’s contributions, and for defined benefit pensions, the capitalised value of the year’s benefit accrual (pension input amount).
| Type of limit | 2025/26 amount | Who it applies to |
|---|---|---|
| Standard annual allowance | £60,000 | Most people |
| Tapered annual allowance (minimum) | £10,000 | Adjusted income > £360,000 |
| Money Purchase Annual Allowance (MPAA) | £10,000 | Flexibly accessed DC pension |
Threshold income and adjusted income — the two taper tests
Tapering only applies if both income tests are failed. If threshold income is £200,000 or below, there is no taper regardless of adjusted income. This is the “safe harbour” that many high earners can use — reducing personal pension contributions can sometimes bring threshold income below £200,000 even when adjusted income is higher.
Threshold income = all taxable income (salary + bonus + dividends + rental + savings) minus personal pension contributions paid gross (or via net pay arrangement). Relief at source contributions are not deducted from threshold income — this catches out a lot of people.
Adjusted income = threshold income plus all employer pension contributions (including salary sacrifice amounts). So if your employer puts in £50,000 and your threshold income is £190,000, your adjusted income is £240,000 — still below £260,000, no taper applies.
The taper: For every £2 of adjusted income above £260,000, the annual allowance reduces by £1. The minimum tapered allowance is £10,000, reached when adjusted income hits £360,000.
Salary sacrifice and the taper — the critical nuance
Salary sacrifice works differently from personal pension contributions for taper purposes. When you sacrifice salary, your gross pay is reduced before tax. This means:
- Threshold income falls — because your gross salary is lower, so the threshold income test is easier to pass
- Adjusted income stays the same — because salary sacrifice contributions are treated as employer contributions, which are added back in the adjusted income calculation
This means salary sacrifice can help you pass the threshold income test (keeping it below £200,000) even if adjusted income remains above £260,000. If threshold income is below £200,000, there is no taper — full stop. This is why the threshold income test is sometimes called the “safe harbour”.
Carry forward — using unused allowance from prior years
If you didn’t use your full annual allowance in any of the previous three tax years, you can carry the unused amount forward and add it to the current year’s limit. This allows contributions well above £60,000 in a single year — useful for variable-income earners, those receiving large bonuses, or anyone making a one-off large contribution before retirement.
The rules:
- You must have been a member of a registered pension scheme in the year you’re carrying forward from (even if you made no contributions)
- You use the current year’s allowance first before drawing on carry forward
- The oldest year’s unused allowance is used first
- If your allowance was tapered in a prior year, only the unused portion of the tapered allowance carries forward — not the full £60,000
- The standard AA for 2022/23 was £40,000; for 2023/24 and 2024/25 it was £60,000
If your total pension input amount exceeds your available allowance (including carry forward), the excess is added to your income and taxed at your marginal rate — 20%, 40%, or 45%. It is not a flat rate charge. If the charge exceeds £2,000 and your contributions to defined benefit or cash balance schemes exceed the standard annual allowance, you can elect “scheme pays” — asking the scheme to pay the charge from your pension pot, which reduces your eventual benefits accordingly.
Frequently asked questions
HICBC, dividend tax, self-employed NI — all the pension-adjacent calculations in one place.
