Annual allowance for pensions saving

The annual allowance for pensions saving is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It is based on your earnings for the year and is capped at £40,000 although a lower limit of £10,000* known as the Money Purchase Annual Allowance (MPAA) may apply if you have already started drawing a pension. The government has announced that this is reducing to £4,000 gross per annum and will be backdated to apply from 6th April 2017.  The annual allowance applies across all of the schemes you belong to, it’s not a ‘per scheme’ limit and includes all of the contributions that you or your employer pay or anyone else who pays on your behalf.

You can top up your allowance for the current tax year (6 April to 5 April) with any allowance you didn’t use from the previous 3 tax years.

The allowance was £50,000 for tax years between 6 April 2011 and 5 April 2014.

The tax year 6 April 2015 to 5 April 2016 was split into 2 periods with different tax-free allowances.