SIPP Annual Allowance Calculator (UK 2026/27)

UK Pension Annual Allowance Guide 2026/27

What is the Annual Allowance?

The Annual Allowance is the maximum pension contribution you can make in one tax year while still receiving tax relief. Standard 2026/27 limit: £60,000 (raised from £40,000 in April 2023). This includes: your personal contributions (grossed up to include basic-rate tax relief). Employer contributions. Any tax relief HMRC adds. Defined Benefit accrual: 'pension input amount' calculated as 16 × increase in pension entitlement. Earnings limit: cannot contribute more than your annual earnings, with the Annual Allowance itself acting as the upper cap on top of that basic earnings rule.

What's the key thing to understand about Tapered Annual Allowance for High Earners?

Taper applies if BOTH conditions met: 'threshold income' over £200,000 (income excluding pension contributions). 'Adjusted income' over £260,000 (income including all pension contributions). Both must be exceeded — common misunderstanding. Taper rate: AA reduced by £1 for every £2 of adjusted income over £260,000. Minimum AA: £10,000 (for adjusted income £360,000+). 2026/27 example: adjusted income £320,000. Excess: £60,000. Taper: £30,000 reduction. AA reduced from £60,000 to £30,000. Adjusted income is broadly your total taxable income plus employer pension contributions, which is why some high earners are caught by the taper even though their salary alone looks lower than the threshold.

What should I know about Money Purchase Annual Allowance (MPAA)?

If you've flexibly accessed a defined contribution pension (taken any taxable amount beyond the 25% tax-free), MPAA is triggered. From the date of first flexible access: future Annual Allowance for DC contributions = £10,000 (not £60,000). MPAA applies for life — cannot be reversed. Does NOT affect: DB scheme contributions. Carry-forward from years before MPAA triggered. Triggers MPAA: taking taxable income via flexi-access drawdown. Taking a UFPLS (uncrystallised funds pension lump sum). Triggers MPAA: withdrawing a small pot lump sum where the whole pot is under £10,000 does NOT trigger it, unlike the other routes listed.

What do I need to know about Carry-Forward Rules?

Carry-forward lets you use unused Annual Allowance from the previous 3 tax years (after using current year first). Rules: must have been a member of a registered pension scheme in the year you carry forward from. Must use current year's full Annual Allowance before carrying forward. Carry-forward only counts if you had income in current year sufficient to support the contribution. 2026/27 carry-forward limits (this is current year + 3 back): 2021/22: £40,000 max. 2022/23: £40,000 max. 2023/24: £60,000 max — the year the Annual Allowance itself was raised from £40,000, giving a larger carry-forward opportunity from this year specifically.

What the Annual Allowance Actually Limits

The pension annual allowance caps the total amount that can be added to your pension each tax year — across all your pensions combined, not per scheme — while still qualifying for tax relief, including your own contributions, any employer contributions, and tax relief itself for a SIPP. Contributing more than the allowance in a tax year doesn't stop the contribution from being made, but it can trigger an annual allowance charge that effectively claws back the tax relief on the excess, taxing it at your marginal rate instead. High earners face a tapered allowance that reduces further above certain income thresholds, so a SIPP annual allowance calculation for a high earner needs to check both the standard allowance and whether tapering applies to their specific income level.

Carry Forward: Using Unused Allowance From Previous Years

If you haven't used your full annual allowance in any of the previous three tax years, carry forward rules may let you use that unused allowance in the current year, on top of the current year's own allowance — provided you were a member of a registered pension scheme in each of those earlier years. This is particularly valuable for people with variable income, such as business owners or those who've just received a bonus, inheritance, or sold a business, letting them make a single large pension contribution that mops up several years of unused allowance at once rather than being capped at just the current year's limit. Carry forward must use the oldest available unused allowance first, and any tax relief is still subject to the separate limit that total contributions can't exceed 100% of your relevant UK earnings for the current tax year.

What Happens If You Exceed the Annual Allowance

Contributing more than the annual allowance in a tax year, including any tapered or money purchase annual allowance that applies, doesn't prevent the contribution from being made, but it does trigger an annual allowance charge on the excess, effectively clawing back the tax relief that shouldn't have been given on the amount over the limit. The charge is calculated by adding the excess back to taxable income for the year and taxing it at the saver's marginal rate, which can mean a higher-rate or additional-rate taxpayer effectively loses the relief advantage on that portion entirely, since relief was given at the point of contribution but is then recovered through the charge. In many cases the charge can be settled by having the pension scheme itself pay it directly from the pension pot, known as "scheme pays," rather than the saver finding the cash personally, though this is usually only available above a certain charge threshold and requires an active request to the scheme by a set deadline. Because the calculation depends on correctly knowing which annual allowance figure applied in each relevant year, including any carry-forward used from the three previous tax years, working out whether an excess contribution has genuinely occurred, and how large any resulting charge is, is often more involved than simply comparing one year's contribution to the headline allowance figure.

Worked Example: Tapered Allowance at a Specific Income Level

Under current taper rules, the £60,000 standard annual allowance reduces by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000. For someone with adjusted income of £300,000: the excess over the £260,000 threshold is £40,000, so the reduction is £40,000 ÷ 2 = £20,000, leaving a tapered annual allowance of £60,000 − £20,000 = £40,000 for that tax year. Contributing more than this tapered figure (without using carry-forward from a year when the taper didn't apply) would trigger the annual allowance charge on the excess.

Tapered Annual Allowance by Adjusted Income

These figures use current typical thresholds and are reviewed by HMRC periodically — always check the figure for the specific tax year in question.

How Employer Contributions Count Toward the Same Allowance

The annual allowance applies to the total of everything paid into your pensions in a tax year — your own contributions, any employer contributions, and tax relief added by HMRC on personal contributions all count toward the same single figure. This is easy to overlook because employer contributions often feel separate from personal saving, but a generous employer match or a bonus sacrificed into a pension can use up allowance just as quickly as money paid in directly. Anyone with a workplace pension and a SIPP running side by side needs to add both together when checking against the limit, not just look at the SIPP in isolation, since exceeding the combined allowance across all pensions triggers the same tax charge regardless of which scheme the excess sits in.

What Counts as 'Pensionable Earnings' When Checking Tax Relief Limits

Separately from the annual allowance, tax relief on personal pension contributions is normally limited to 100% of your UK relevant earnings for the year (or a lower fixed amount if you have little or no earnings), so someone with low earnings in a given year may not get full tax relief on a large contribution even if it falls under the annual allowance. Relevant earnings generally means employment income or self-employed trading profits, not rental income, dividends, or most pension income itself. This distinction matters most for people with variable income, such as the self-employed or those taking a career break, who may want to time larger contributions for years when earnings are higher to maximise the relief actually received.