TL;DR — The Key Changes
- • Annual Allowance rose from £40,000 → £60,000 (from April 2023)
- • Lifetime Allowance abolished from April 2024 (no cap on total pot)
- • Money Purchase Annual Allowance (MPAA) rose from £4,000 → £10,000
- • Carry-forward of unused allowance from the 3 prior years still applies
Why These Changes Matter
The pension annual allowance is the maximum you (and your employer) can contribute to your pension each tax year while still receiving tax relief. Before April 2023, the limit was £40,000. Earners using pension salary sacrifice to escape the 60% trap were often constrained by this cap.
The rise to £60,000 gives higher earners significantly more room to reduce their Adjusted Net Income — particularly useful for avoiding the 60% trap zone (£100,000–£125,140) and the newly raised HICBC threshold. This change is confirmed on HMRC's annual allowance guidance .
| Allowance | Before 2023/24 | From 2023/24 |
|---|---|---|
| Annual Allowance | £40,000 | £60,000 |
| Lifetime Allowance | £1,073,100 | Abolished |
| MPAA (flexible access) | £4,000 | £10,000 |
| Tapered AA threshold | £260,000 | £260,000 |
Using Carry-Forward to Maximise Contributions
Carry-forward allows you to use unused Annual Allowance from the three previous tax years, provided you were a member of a registered pension scheme in those years. With the allowance now at £60,000, the maximum available via carry-forward in 2025/26 is potentially:
Note: You can only use as much carry-forward as you have relevant UK earnings in the tax year. Your employer's contributions also count toward the allowance.
Watch Out: The Tapered Annual Allowance
Very high earners face a reduced allowance. If your threshold income exceeds £200,000 AND your adjusted income exceeds £260,000, your Annual Allowance tapers down by £1 for every £2 of adjusted income over £260,000 — down to a minimum of £10,000. This applies to both employer and employee contributions combined.
If you are a very high earner, always verify your tapered annual allowance before making large pension contributions. Exceeding your allowance triggers an annual allowance charge at your marginal rate.
About This Article
Written by the Tax Trap Calculator editorial team · Published April 2024 · Updated February 2026. Pension allowance figures sourced from HMRC's pension annual allowance guidance. This article is for informational purposes only.