Contribute too much to a pension and you face an annual allowance charge. We check the limit that applies to you, including tapering for high earners, use carry-forward, and keep you clear of the charge.
Pension Annual Allowance
The pension annual allowance is £60,000, but it is reduced, tapered, for high earners with adjusted income above the threshold, down to a minimum, and it drops to the money purchase annual allowance once you flexibly access a pension. Exceeding your allowance triggers a tax charge, but unused allowance from the previous three years can often be carried forward to avoid it.
Your Tax Help Accountants works out the annual allowance that actually applies to you, taking tapering and any money purchase annual allowance into account, checks your contributions across schemes including employer contributions, and uses carry-forward to maximise what you can pay in without a charge. Where a charge is unavoidable, we report it correctly.
High earners are often caught by the tapered annual allowance without realising, because it counts employer contributions and is based on total income. Checking it before you contribute, and using carry-forward, avoids an unexpected tax charge.
The Detail That Matters
You can normally get tax relief on pension contributions up to £60,000 a year, but the allowance is tapered for high earners and slashed once you have flexibly accessed a pension. Exceeding it triggers a tax charge, though carry-forward often prevents that.
The annual allowance is £60,000 (or your earnings, if lower). Crucially, you can carry forward unused allowance from the previous three tax years, so a large one-off contribution can often be accommodated without a charge if earlier years were not fully used.
If your adjusted income exceeds £260,000, the allowance reduces by £1 for every £2 over, down to a minimum of £10,000 at £360,000. Adjusted income includes employer contributions, which catches many people out, so the allowance that actually applies to you needs calculating carefully.
Once you flexibly access a defined-contribution pension (beyond the tax-free lump sum), your allowance for further money-purchase contributions drops to £10,000, and carry-forward no longer applies to it. Drawing a small amount early can therefore quietly restrict future funding.
If you do exceed your allowance, the excess is added to your taxable income and charged at your marginal rate. Where the charge is large, the scheme can pay it under Scheme Pays. We calculate the position across all schemes and report it correctly, or use carry-forward to avoid it.
The taper quietly catches high earners because it counts employer contributions and total income, so someone who thinks they have £60,000 of headroom may actually have £10,000, and a routine contribution creates a charge.
Key Figures
How We Help
We calculate the annual allowance that applies to you, including tapering for high earners and the money purchase annual allowance if you have accessed a pension.
Unused allowance from the previous three years can often be carried forward. We use it so you can contribute more without triggering a charge.
Where a charge is unavoidable, we calculate and report it correctly, including the option to have the scheme pay it where beneficial.
All the forms, calculations and correspondence handled on your behalf, so you never have to decode HMRC's rules or sit on hold.
A clear fixed fee quoted after a free call, your position explained in plain English, and never a surprise bill.
We act quickly, and where earlier years are involved we put those right too, reclaiming refunds or minimising penalties.
The tapered annual allowance quietly catches many high earners, and the charge can be significant. Checking your real allowance across all contributions and using carry-forward is what keeps you out of trouble, which we handle.
Recent Client Outcome
A client with adjusted income near £300,000 wanted to make a £40,000 pension contribution and believed they were comfortably within the £60,000 limit.
What we did. We calculated their tapered allowance at just £30,000, then brought in £22,000 of unused allowance carried forward from the previous three years, giving £52,000 of available headroom.
The outcome. The full £40,000 contribution fitted within the combined allowance, so no annual allowance charge arose, where without carry-forward they would have faced a charge on £10,000 at 45%, around £4,500.
Checking the real allowance, and using carry-forward, let them fund their pension in full and avoid an unexpected tax charge entirely.
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Questions Answered
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