SIPP allowance

How much can I pay into a SIPP or other pension?

Every year you get a generous allowance for making contributions into SIPPs and other pensions. The Government sets this limit because your pension contributions are topped up with 20-45% tax relief. There is also a maximum amount you can hold in your pension over your lifetime – this is called the lifetime allowance.

How much is the pension annual allowance?

Normally you can pay as much into your pension as you earn each year, up to a maximum of £40,000. This is known as your annual allowance. Transferring pensions between providers doesn't use up your annual allowance.

The tapered pension annual allowance for higher earners

The usual £40,000 annual allowance is cut for people with an adjusted annual income of £240,000 or more. The allowance reduces by £1 for every £2 of income above £240,000, down to a minimum of £4,000.

If you don’t pay tax

Non-taxpayers and children can also make pension contributions of up to £2,880 a year (making £3,600 with basic-rate tax relief).

The lifetime allowance

The lifetime allowance is a limit to the amount you can save in your SIPP or other pension over your lifetime. The allowance is currently £1.0731 million – you will pay tax on any pension savings you make in excess of this. The excess is taxed at 25% (plus Income Tax) as income or 55% as a lump sum. Through Tilney we have expert financial planners who could help you to protect your lifetime allowance.

Speak to an expert

Previous pension allowances

Tax year Annual allowance Lifetime allowance
2020/21 £40,000 £1.0731 million
2019/20 £40,000 £1.055 million
2018/19 £40,000 £1.03 million
2017/18 £40,000 £1 million
2016/17 £40,000 £1 million
2015/16 £40,000 £1.25 million

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Pension carry forward

Pension carry forward rules let you make contributions above your annual allowance. If you paid in less than your annual allowance in any of the past three tax years you can carry forward the unused allowance, as long as you had a SIPP or other pension in place for each of the three years and your total contributions don’t exceed your current earnings.

Carry forward lets you make pension contributions above your annual allowance.
Find out more about pension carry forward

Speak to an expert about pension allowances

If you have any questions about your pension allowances please get in touch with our experts:

SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you then a SIPP might not be right for you. Please contact us for guidance or advice if you are unsure whether a SIPP is right for you.

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