Pensions are one of the most tax efficient ways to save. Most people know that.

What fewer people know is how easy it is to accidentally exceed the limits and end up with a tax charge that could have been avoided with a short check beforehand.

The annual allowance for 2025/26 is £60,000. But for some people it is much lower. If you have already taken money from a pension, it could be as low as £10,000. If your income is above certain thresholds, it tapers down. And the limit applies across all your pensions combined, not each one separately.

This guide explains how pension allowances actually work and where the surprise tax bills usually come from. There is a practical checklist at the end to help you understand the key areas.

Pension planning is an area where the rules are detailed and the consequences of getting it wrong can be costly. We would always recommend speaking with an independent financial adviser before making any contribution decisions.

If you have questions about the tax side of things, we are happy to point you in the right direction.