Annual Allowance Charge Calculator
Calculate pension annual allowance excess, carry forward, tapered AA and scheme pays eligibility for 2026/27
Last updated: March 2026
Annual Allowance Charge Calculator 2026/27
Calculate your pension annual allowance position, including carry forward from previous 3 years, tapered annual allowance for high earners, and the annual allowance charge at your marginal tax rate.
Step 1: Pension Inputs This Year
Step 2: Carry Forward (Previous 3 Years)
Enter unused annual allowance from the previous three tax years. Carry forward is used oldest first. You must have been a member of a registered pension scheme in each of those years.
Step 3: Income (for Tapered AA and Charge Rate)
Annual Allowance Rates 2026/27
| Allowance | 2026/27 Amount | Notes |
|---|---|---|
| Standard Annual Allowance | £60,000 | Total pension input (DC + DB) across all schemes |
| Money Purchase Annual Allowance (MPAA) | £10,000 | DC only — triggered by flexible access |
| Minimum Tapered Annual Allowance | £10,000 | When adjusted income exceeds £360,000 |
| Threshold Income (taper trigger, threshold) | £200,000 | If above this, check adjusted income |
| Adjusted Income (taper trigger) | £260,000 | Taper reduces AA by £1 per £2 above this |
| Carry forward years | 3 years | Use oldest year first; must be scheme member |
Expert Guide: Pension Annual Allowance and Carry Forward
1. How the Annual Allowance Works — DC vs DB
The annual allowance (AA) is the maximum total pension savings that benefit from tax relief each year across all your pension schemes combined. For DC pensions, the pension input is simply the total contributions paid — employee plus employer — in the pension input period (usually the tax year). For DB pensions, the pension input is the increase in the capital value of the pension benefit, calculated using the formula: (closing pension × 16 + lump sum) − (opening pension × 16 + lump sum) × CPI revaluation factor.
The DB calculation can generate surprisingly large figures for senior public sector workers. An NHS consultant or a senior teacher accruing significant DB pension in a final salary scheme can easily generate a pension input of £60,000–£100,000 from scheme accrual alone — without making any additional voluntary contributions.
2. Carry Forward — Using Three Years of Unused Allowance
Carry forward allows you to use annual allowance that was unused in the previous three tax years. The rules: (a) you must have been a member of a registered pension scheme in each year you carry forward from (paying contributions, accruing DB benefit, or just holding a dormant pot); (b) you must use the current year's full annual allowance first; (c) carry forward is applied oldest year first.
Example: 2026/27 AA = £60,000. Unused from 2023/24 = £20,000. Unused from 2024/25 = £15,000. Unused from 2025/26 = £10,000. Total available = £105,000. If you invest £90,000 in 2026/27, no charge applies. Unused carry forward remaining = £15,000 (from 2024/25 and 2025/26). The 2023/24 unused allowance must be used this year or it is lost permanently — carry forward only goes back three years.
3. Tapered Annual Allowance for High Earners
The tapered AA targets those earning over £260,000 in adjusted income (broadly: all income plus all pension contributions). If your threshold income (income excluding employer pension contributions, broadly) is above £200,000 AND your adjusted income exceeds £260,000, your AA tapers downward.
Taper calculation: For every £2 of adjusted income above £260,000, the AA reduces by £1. Minimum AA = £10,000 (reached when adjusted income = £360,000). Example: adjusted income £310,000. Excess = £50,000. Reduction = £25,000. Tapered AA = £60,000 − £25,000 = £35,000.
Important nuance: If threshold income is £200,000 or below, the taper does NOT apply, even if adjusted income is above £260,000 (because employer contributions alone put adjusted income above the limit). This protected many NHS doctors and senior academics when the rule was introduced. Always calculate threshold income before checking adjusted income.
4. Scheme Pays — Paying the Charge from Your Pension
If you face an annual allowance charge, you can elect for the pension scheme to pay it on your behalf — deducting the charge from your pension fund. This is called 'scheme pays'. Mandatory scheme pays is available if: (a) the charge is over £2,000, AND (b) the excess is generated within that particular scheme.
The scheme will reduce your future pension benefit in proportion to the charge paid. The reduction is calculated by the scheme actuary. You must notify the scheme by 31 July following the end of the tax year (so by 31 July 2027 for a 2026/27 charge). Voluntary scheme pays (for charges under £2,000 or from a different scheme) is at the scheme's discretion — not all schemes offer it.
Trade-off: Scheme pays preserves your cash today but permanently reduces your pension. Whether this is beneficial depends on your marginal rate now vs your expected marginal rate in retirement, the scheme's actuarial reduction factor, and your longevity.
5. Money Purchase Annual Allowance (MPAA) in Detail
Once triggered, the MPAA restricts DC pension contributions (employee + employer) to £10,000/year. The alternative annual allowance for DB accrual remains at £60,000 − £10,000 = £50,000 (for those in DB schemes). Crucially, carry forward from years when you had the full £60,000 AA cannot be applied to the DC (MPAA) side after triggering — it can only be used for DB accrual.
Triggers for MPAA: Taking a UFPLS; entering flexi-access drawdown AND taking income from that drawdown; taking a flexible annuity that can decrease. Does NOT trigger MPAA: Taking a pension commencement lump sum (PCLS) and designating to drawdown without yet taking income; taking an annuity that cannot decrease; small pot commutation.
If you have triggered the MPAA and your employer still contributes £10,000+ to your DC pension, inform your employer immediately. Employer contributions alone can breach the MPAA if they exceed £10,000.
6. The Annual Allowance Charge and Self Assessment
The annual allowance charge is assessed via Self Assessment. Your pension scheme does not automatically deduct it. If you have an annual allowance charge to pay, you must declare it on your Self Assessment tax return for the relevant tax year. The charge is included in your income tax calculation and is payable by 31 January following the end of the tax year (31 January 2028 for 2026/27 charges).
HMRC may also write to taxpayers they identify as potentially at risk (particularly in the NHS and civil service), but this is not guaranteed. Keep records of all pension input amounts, carry forward calculations, and scheme pays elections. Your pension provider must provide a Pension Savings Statement if your pension input exceeds the annual allowance — but the threshold for issuing this is not the full carry forward position, so you may need to request it.
7. Pension Input Period (PIP) — Important for DB Schemes
The pension input period (PIP) for all registered pension schemes is now aligned to the tax year (6 April to 5 April). Before April 2016, PIPs could differ. The DB pension input is the increase in the notional capital value of your accrued benefit over the PIP. The opening value is the benefit as at the start of the year, increased by September CPI.
2026/27 CPI revaluation: The opening value of the DB benefit as at 6 April 2026 is the benefit at 5 April 2025, multiplied by 1 plus the September 2025 CPI rate. HMRC publishes the statutory CPI revaluation factor each year. For 2024/25, the September 2023 CPI rate was 6.7%. For 2025/26, the September 2024 CPI was 1.7%. The actual figure for 2026/27 will depend on September 2025 CPI, which will be confirmed by HMRC.
8. Planning Strategies to Avoid the Annual Allowance Charge
DC pension: (a) Use carry forward — plan large contributions when you have unused allowance from prior years. (b) Avoid crossing the adjusted income threshold (£260,000) in years of high employer contributions. (c) If you have flexibly accessed a pension, inform your employer of the MPAA and adjust contributions accordingly. (d) Consider a salary sacrifice arrangement — this reduces adjusted income and may prevent taper from applying.
DB pension: (a) If in a public sector final salary scheme, consider whether to opt out of additional accrual in high-earning years — the scheme actuary can advise on the pension input amount for a proposed accrual. (b) Apply for a 'deferred member scheme pays' election if the charge arises in a year you are a deferred member. (c) Check if you qualify for pensioner protection: if your taxable pension income plus your pension input exceeds the AA, your charge is limited to the pension growth above the AA in that year.
Worked Examples: Annual Allowance Charge 2026/27
Example 1: Carry Forward Eliminates the Charge
Pension input 2026/27: £75,000. Standard AA: £60,000. Unused AA from 2023/24: £0; 2024/25: £8,000; 2025/26: £10,000. Total carry forward: £18,000. Total available allowance: £78,000. Excess: £75,000 − £78,000 = −£3,000 (no excess). Annual allowance charge: £0. Remaining carry forward: £3,000 unused from 2025/26 (2024/25 fully used; 2023/24 expired).
Example 2: Tapered AA — High Earner
Adjusted income: £310,000. Threshold income: £250,000 (above £200,000 — so taper applies). Taper reduction: (£310,000 − £260,000) ÷ 2 = £25,000. Tapered AA: £60,000 − £25,000 = £35,000. Pension input: £55,000. No carry forward. Excess: £55,000 − £35,000 = £20,000. Charge at 45% (additional rate): £9,000 annual allowance charge.
Example 3: MPAA Breach
MPAA triggered. DC pension input (employer + employee): £14,000. MPAA: £10,000. No carry forward available for MPAA. Excess DC input: £4,000. Charge at 40%: £1,600 annual allowance charge. Charge below £2,000 — mandatory scheme pays not available. Must pay charge via Self Assessment.
Expert Reviewed — Reviewed by chartered financial planners and pension tax specialists. Verified against Finance Act 2004 as amended, HMRC PTM guidance, and Finance Act 2023 (AA increase to £60,000). Last verified: March 2026.
Official Sources
Disclaimer: This calculator provides estimates based on published HMRC rates and rules. It does not account for all complexities, including DB scheme-specific pension input period calculations, pension protection, or interactions with salary sacrifice. Always confirm your pension input amounts with your scheme administrator and consult a qualified pension tax adviser for complex situations.