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How much can I contribute to my pension?

If you're a UK resident under the age of 75, the general rule is you can contribute to all your pensions as much as you earn and receive tax relief each tax year.

A pension annual allowance (£40,000 for most people) and a lifetime allowance (£1,073,100 for most people) also apply.

There are other factors that affect how much you can pay into your pension, detailed below, which you may need to consider, depending on your circumstances.

Other factors to consider

See the scenarios below to find out what else you need to consider when making contributions to your pension.

I want to contribute over my annual allowance this tax year

Some higher earners can contribute up to £160,000 by 'carrying forward' unused annual allowance from previous years. To be able to use carry forward, you must:

  • Have unused annual allowance from any of the last three tax years. The tax year runs from 6 April to 5 April the following year.
  • Have been a member of a UK registered pension scheme (this does not include the State Pension) in each of the years from which you are carrying forward, even if you haven't contributed to it.
  • Have earnings of at least the amount you are contributing. For instance, to make a contribution of £100,000 now, you must have earnings of at least £100,000 in the 2021/2022 tax year.

Download the annual allowance and carry forward factsheet

My 'adjusted income' is over £240,000

Your annual allowance could be lower than £40,000.

Broadly speaking, adjusted income is your total taxable income (including salary, dividends, rental income and savings interest) plus the value of any employer pension contributions.

For every £2 of adjusted income over £240,000, your annual allowance falls by £1. If your adjusted income is £312,000 or more, your annual allowance is £4,000. See the examples below.

There may be other factors to consider, please read our factsheet.

Adjusted income Annual allowance
£240,000 £40,000
£260,000 £30,000
£280,000 £20,000
£300,000 £10,000
£312,000 or above £4,000

I'm a member of a defined benefit (e.g. final salary) pension

The benefits you are building up each year are assigned a monetary value.

This value counts towards the annual allowance and could therefore restrict what you can contribute to another pension. You need to contact your pension administrator and ask for this value, including against which year’s annual allowance it counts (for the 2015/16 tax year or earlier only)

I have already accessed my pension

If you have accessed a pension since 6 April 2015, or had flexible drawdown before, a reduced Money Purchase Annual Allowance of £4,000 may also apply. You cannot use carry forward to increase the Money Purchase Annual Allowance. To find out when this allowance applies, download our Annual Allowance Factsheet.

Pension, contribution and tax rules are subject to change by the government. Tax reliefs referred to are those currently applying. Their value depends on your individual circumstances.

The annual allowance (generally £40,000) is the maximum amount that can be contributed in total from all sources (for instance yourself, your employer) into all your pensions in a tax year. Contributions above the annual allowance are taxed as income, unless you are able to carry forward unused annual allowance from any of the last three tax years. The annual allowance does not apply to any pension transfers.

Download the annual allowance and carry forward factsheet

The lifetime allowance (currently £1.03 million, and rising each year with CPI inflation) is the total value you can hold in pensions without incurring an additional tax charge. This is measured whenever you take benefits, reach age 75 or die, whichever is soonest.

Download the lifetime allowance factsheet

Important information

You can't normally access the money in a SIPP until at least age 55 (57 from 2028). Please remember taxation depends on your circumstances and tax rules can change over time. Investments can go down in value as well as up so you could get back less than you invest. This website is not personal advice; if you are unsure of an investment's suitability for your circumstances you should seek advice. Correct for 2021/2022 tax year.

Have a question?

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invest@hl.co.uk

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