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.
Pension annual allowance if you earn more than £150,000
The usual £40,000 annual allowance is cut for people with annual earnings of more than £150,000. The allowance reduces by £1 for every £2 earned above £150,000, down to a minimum of £10,000 for those earning more than £210,000.
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 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 our wider Tilney Group, we have expert financial planners who could help you to protect your lifetime allowance.Speak to an expert
Previous pension allowances
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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
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.