Home
Back
HMRC Pension Savings Allowance Calculation:
| From: | To: |
The HMRC Pension Savings Allowance sets the maximum amount that can be contributed to pension schemes each year with tax relief. For 2025, the annual allowance is £60,000. Contributions exceeding this limit may be subject to a tax charge.
The calculator uses the formula:
Where:
Explanation: The calculation determines the tax charge payable on pension contributions that exceed the annual allowance set by HMRC.
Details: Accurate calculation of pension savings excess and associated tax charges is crucial for tax compliance and financial planning. It helps individuals avoid unexpected tax bills and plan their pension contributions effectively.
Tips: Enter the excess amount over the annual allowance in GBP and the applicable tax rate as a decimal (e.g., 0.4 for 40%). Both values must be valid (excess ≥ 0, tax rate between 0-1).
Q1: What is the current annual allowance for pension savings?
A: For 2025, the annual allowance is £60,000. This amount may change in future tax years.
Q2: How is the tax rate determined for the excess contribution?
A: The tax rate depends on your marginal rate of income tax. The excess amount is added to your taxable income and taxed at your highest rate.
Q3: Are there any circumstances where the annual allowance might be different?
A: Yes, individuals with high income (over £260,000) may have a tapered annual allowance, and those who have flexibly accessed their pension may have a lower money purchase annual allowance.
Q4: What happens if I exceed the annual allowance?
A: You'll receive a tax charge on the excess amount. This charge is called the annual allowance charge and is added to your tax bill for the tax year.
Q5: Can I carry forward unused annual allowance from previous years?
A: Yes, you can carry forward unused annual allowance from the previous three tax years, provided you were a member of a pension scheme during those years.