Saving limits

The government sets limits on the amount of tax relief you can get on your pension.

The limits don’t affect most people, but if you go over those limits, you’ll need to pay a tax charge.

Annual allowance

The limit to the amount of tax-free pension contributions you can pay in a year is called the annual allowance. It’s currently £60,000 for most people.

If you earn more than £200,000 in a year and have an adjusted income over £260,000, your annual allowance may be reduced and could be as low as £10,000.

If you’ve already taken some pension savings from a defined contribution pension, your annual allowance is reduced to £10,000.

Find out more about the annual allowance on the government website.

Lump sum allowances

You can usually take up to 25% of your pension fund as a tax-free cash lump sum. The most you can take currently is £268,275 (known as the lump sum allowance).

There’s also an allowance called the lump sum and death benefit allowance. This limits the total amount of tax‑free lump sums you and your beneficiaries can currently receive to up to £1,073,100, depending on your circumstances.

If you hold a protected allowance, this may increase the amount of tax-free lump sums you can take from your pensions.

Find out more about the annual allowance on the government website.