Tools
Pension Annual Allowance Calculator: Taper and Carry Forward
The annual allowance is the total that can go into your pensions in a tax year with tax relief, counting your contributions, the tax relief added to them and everything your employer pays. Two things trip people up: high earners can see the £60,000 allowance tapered down to £10,000, and most people can carry forward unused allowance from the three previous tax years, which is often far more headroom than they think. This calculator works out both, and the separate cap that limits what you personally can pay in.
How much annual allowance have you got left?
Enter this tax year first, then the three previous tax years if you want to include carry forward. All pension figures are gross, so include the tax relief added to your own contributions.
This tax year
Carry forward: the three previous tax years
| Year | Allowance that year | Total paid in that year |
|---|---|---|
What counts towards the annual allowance
Everything paid into your pensions in the tax year counts, not just what leaves your bank account. That means your own contributions plus the 20% basic rate relief added to them, anything your employer pays, and anything paid by salary sacrifice. If you are in a defined benefit scheme, what counts is the pension input amount, which is the growth in your promised pension over the year multiplied by 16, not the contributions on your payslip. Your scheme should send you a pension savings statement if your input goes over the standard allowance.
The allowance runs on the tax year, 6 April to 5 April, and it is not per pension. One pot or six, the total is what matters.
The taper, and why two income tests exist
High earners lose allowance under the taper, but only if they fail both tests in the same year:
- Threshold income above £200,000. Broadly your taxable income after your own pension contributions are taken off, with salary sacrifice agreed after 8 July 2015 added back so it cannot be used to duck the test.
- Adjusted income above £260,000. Broadly your taxable income with all pension contributions, including your employer's, added in.
Fail both and the allowance drops by £1 for every £2 of adjusted income above £260,000, to a floor of £10,000 once adjusted income reaches £360,000. Pass either test and you keep the full allowance, which is why the threshold income test is worth understanding: paying more into your pension reduces threshold income, and a big enough personal contribution can pull you back under £200,000 and restore the whole allowance.
Carry forward: three years back, oldest first
Unused allowance from the three previous tax years can be added to this year's. The conditions are simple but strict:
- You must have been a member of a registered UK pension scheme in each year you carry forward from, even if you contributed nothing.
- This year's allowance is used first, then the earliest of the three years, working forwards.
- Carry forward does not lift the earnings cap. Your own contributions still get relief only up to 100% of your earnings this year, or £3,600 gross if you earn less than that. Employer contributions are not capped by your earnings, which is why company owners often route large one-off contributions through the company.
- Carry forward is not available against the money purchase annual allowance.
The £10,000 money purchase annual allowance
Once you flexibly access a defined contribution pension, the amount you can keep paying into money purchase pensions drops to £10,000 a year with no carry forward. It is triggered by taking taxable income from flexi-access drawdown or by taking an uncrystallised funds pension lump sum. It is not triggered by taking your 25% tax-free cash on its own, by buying a lifetime annuity, or by cashing in a small pot of under £10,000 under the small pots rule. If you are still working and still contributing, that distinction is worth thousands.
If you go over
Going over is not a penalty as such. The excess is added to your taxable income for the year and charged at your marginal rate, which claws back the relief you should not have had. You report it on your Self Assessment return. Where the charge is more than £2,000 and your input to a single scheme was more than the standard £60,000, you can require that scheme to pay the charge out of your pot instead, which reduces your benefits but avoids finding the cash. The election deadline sits well over a year after the tax year ends, so ask your provider early rather than discovering the date has passed.
Assumptions and limits
- Uses the £60,000 standard allowance, the £200,000 and £260,000 taper thresholds, the £10,000 taper floor and the £10,000 money purchase allowance. Every allowance field is editable, so check the current figures on GOV.UK after a Budget and change them if they have moved.
- Threshold and adjusted income are approximated from what you enter. Reliefs such as gift aid, trading losses and some overseas cases can move both, and a large bonus or a lumpy self-employed year can push you over for one year only.
- The estimated charge stacks the excess on top of your income after your own contributions, using the income tax bands for England, Wales and Northern Ireland and the standard £12,570 personal allowance. Scottish taxpayers pay Scottish rates on the excess.
- This is information, not advice. If real money hangs on the answer, check it with your scheme or a regulated adviser.
Related
- Pension tax relief calculator: what a contribution actually costs you after relief.
- Salary sacrifice calculator: the National Insurance saving a personal contribution never gives you.
- Pension drawdown calculator: how long a pot lasts once you start taking an income.
- Pension tax relief explained and how to open a SIPP.
