Pension Guide: Contribution Timing in the UK — When and How Much to Pay In

The annual allowance is the maximum amount you can contribute to all of your pension schemes in a single tax year while still receiving tax relief, without incurring an annual allowance charge. (Source: pension drawdown) (Source: pension annual allowance) For the 2025/26 tax year (6 April 2025 to 5 April 2026), the standard annual allowance is £60,000. This figure includes both your own contributions and any employer contributions made on your behalf.

If your total pension inputs exceed the annual allowance, the excess is added to your income and taxed at your marginal rate through the annual allowance charge. This makes it critical to track all contributions across every pension scheme you hold — workplace pensions, SIPPs, and any other registered pension arrangements.

For high earners, the tapered annual allowance reduces the £60,000 limit. The taper applies if your threshold income exceeds £200,000 and your adjusted income (which includes employer pension contributions) exceeds £260,000. For every £2 of adjusted income above £260,000, the annual allowance reduces by £1, down to a minimum of £10,000. This means anyone with adjusted income of £360,000 or above has an annual allowance of just £10,000.

There is also the money purchase annual allowance (MPAA) of £10,000, which is triggered if you have flexibly accessed your defined contribution pension benefits — for example, by taking an uncrystallised funds pension lump sum or drawing income through flexi-access drawdown. Once the MPAA applies, it cannot be reversed, and it restricts your money purchase contributions to £10,000 per year. For a broader overview of how pension tax relief works across different tax bands, see our pension tax relief guide.

One of the most powerful but frequently overlooked pension planning tools is carry forward. This rule allows you to use any unused annual allowance from the three previous tax years, provided you were a member of a registered pension scheme during those years. For the 2025/26 tax year, the relevant prior years and their allowances are:

• 2022/23: £40,000 annual allowance
• 2023/24: £60,000 annual allowance
• 2024/25: £60,000 annual allowance

If you made no pension contributions in any of those years while being a member of a scheme, and you also have the full £60,000 available in 2025/26, your total available allowance through carry forward could be as much as £220,000. This is calculated as £40,000 + £60,000 + £60,000 + £60,000.

Carry forward is used automatically — you do not need to elect for it or notify HMRC in advance. However, unused allowance from earlier years is used first, following a first-in, first-out principle. So contributions above your current year's allowance would draw on 2022/23 unused allowance before 2023/24, and so on.

The timing consideration here is significant. Any unused allowance from 2022/23 will expire permanently after 5 April 2026. If you have been building up unused allowance and intend to make a large contribution — perhaps from a bonus, an inheritance, or the sale of an asset — doing so before the end of the current tax year ensures you capture the maximum carry forward benefit. Waiting until 2026/27 means you lose access to the 2022/23 year entirely.

To use carry forward, you must have had relevant earnings at least equal to the contribution you wish to make (or employer contributions must bring the total within the allowance). The contribution must also be physically paid into the pension within the tax year — a commitment or instruction given on 4 April but not processed until 7 April will fall into the following year. For more on year-end deadlines and what to prioritise, see our tax year end checklist.

Salary sacrifice — sometimes called salary exchange — is an arrangement where you agree with your employer to reduce your contractual salary in return for an equivalent employer pension contribution. Because the contribution is made by your employer rather than by you, it is not subject to employee National Insurance contributions (currently 8%) or employer National Insurance contributions (currently 15%).

For a higher rate taxpayer earning £60,000 who sacrifices £10,000 into their pension, the savings can be substantial. Without salary sacrifice, a personal pension contribution of £10,000 (gross) costs the employee £8,000 net of basic rate relief, with the additional higher rate relief of £2,000 claimed back through Self Assessment months later. With salary sacrifice, the same £10,000 goes into the pension, the employee saves £800 in NI (8% of £10,000), and the employer saves £1,500 in NI (15% of £10,000). Many employers pass some or all of their NI saving back to the employee as an additional pension contribution, making salary sacrifice even more attractive.

The timing of salary sacrifice arrangements matters because they must be agreed in advance of the work being done. You cannot retrospectively sacrifice salary you have already earned. If you want salary sacrifice to apply from April 2026 onwards, the agreement typically needs to be in place before your April pay period begins. Similarly, if you want to maximise contributions in the current tax year, you need to ensure your sacrifice arrangement was set up in time for it to be processed in your remaining 2025/26 pay runs.

It is also worth noting that salary sacrifice reduces your gross salary for all purposes — including mortgage affordability calculations, statutory maternity or paternity pay, and other salary-linked benefits. Timing a sacrifice around major life events requires careful thought. For a detailed look at how salary sacrifice interacts with pension contributions, see our salary sacrifice guide.

The 5 April 2026 deadline marks the close of the 2025/26 tax year, and several pension-related opportunities are time-limited. Missing this date can mean losing tax relief, forfeiting carry forward allowance, or failing to optimise your overall tax position for the year.

First, any personal pension contributions must be received by your pension provider before the tax year ends for relief to apply in 2025/26. For relief at source pensions — the most common type for personal pensions and SIPPs — your provider adds basic rate tax relief (20%) automatically to your net contribution. So a payment of £8,000 becomes £10,000 gross in your pension. Higher rate (40%) and additional rate (45%) taxpayers must then claim the extra relief through their Self Assessment tax return. If you are a higher rate taxpayer and contribute £10,000 gross, you receive £2,000 automatically and claim a further £2,000 through Self Assessment, making the true cost to you just £6,000.

For workplace pensions using a net pay arrangement, tax relief is given at your full marginal rate immediately through payroll. There is no need to claim through Self Assessment. However, this means your contribution must go through your employer's payroll system before the final pay run of the tax year.

Second, if you have not yet used your ISA allowance (£20,000 for 2025/26), coordinating ISA and pension contributions before 5 April can be tax-efficient. Pensions offer upfront tax relief but are locked away until age 55 (rising to 57 from 2028), while ISAs provide tax-free growth and withdrawals with full access. The right balance depends on your circumstances.

Third, with the lifetime allowance abolished from 6 April 2024, the constraint on total pension wealth has been replaced by the lump sum allowance of £268,275, which caps the tax-free cash you can take. This means there is now no penalty for building a large pension pot, making maximising annual contributions — and using carry forward — more attractive than ever. Our pensions hub brings together all of our pension guidance in one place.

While regular monthly contributions through a workplace pension are the simplest approach, there are specific scenarios where the timing of pension contributions has an outsized impact on your finances.

Bonus season is one of the most common triggers. If you receive an annual bonus in March, contributing it to your pension via salary sacrifice before 5 April saves income tax and National Insurance in the current tax year. Waiting until after 5 April means the contribution falls into the next tax year, potentially wasting current-year allowance or carry forward from 2022/23.

Changes in income are another critical factor. If you know your earnings will cross the higher rate threshold (£50,270 for 2025/26) in the current year but may drop below it next year, front-loading contributions into the higher-earning year secures relief at 40% rather than 20%. Conversely, if you expect a significant pay rise or windfall next year, it may be worth deferring a large contribution to secure relief at a higher rate.

For those approaching the tapered annual allowance thresholds — £200,000 threshold income and £260,000 adjusted income — the timing and structure of contributions can determine whether you have a £60,000 or a £10,000 annual allowance. Employer pension contributions count towards adjusted income, so restructuring the timing of bonus payments or pension inputs around these thresholds can be highly valuable.

Finally, those who have triggered the money purchase annual allowance by flexibly accessing pension benefits need to be especially careful. The MPAA limits money purchase contributions to £10,000 per year, and this cannot be carried forward. Timing contributions to stay within this limit — while potentially directing additional savings to defined benefit schemes, where the MPAA does not apply — requires precise planning.

In all of these scenarios, the key principle is the same: pension contributions are irrevocable, and the tax year in which they fall determines the relief you receive. Planning ahead — ideally well before the March rush — gives you the best chance of optimising your position.

This article is for informational purposes only and does not constitute regulated financial advice. Pension rules and tax relief are subject to change. For personalised advice on your pension arrangements, consult a qualified financial adviser.