Pension premiums

There is no limit on the amount that may be contributed to a registered pension scheme, but a tax charge may apply if payments are made in excess of the annual allowance. The maximum amount on which an individual can claim tax relief in any tax year is the greater of the individual's UK relevant earnings or £3,600.

If total pension input exceeds the annual allowance of £40,000 there is a tax charge at 20/40/45% on the excess. This is subject to transitional provisions and utilising unused allowances from previous years. Total pension input is the increase in value of the aggregate of all of the individual’s pension savings. The pension input period is usually the year to the anniversary date which falls within the relevant tax year.

Maximum age for tax relief 74
Minimum age for taking benefits 55
Annual allowance £40,000
Lifetime allowance £1,250,000 
Normal maximum tax-free lump sum 25%

Annual allowance

There may be entitlement to a greater allowance if there are unused reliefs from the three earlier tax years. The relief may however be reduced to £10,000 if pension savings are accessed under the new rules for accessing benefits introduced on 6 April 2016.


The lifetime allowance reduces to £1 million with effect from 6 April 2016. Transitional protection for pension rights already over £1 million will be introduced at the same time to ensure the change is not retrospective.

From April 2016, the government will legislate to allow people who are already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.