Pension Contributions & Tax Planning – Key points before 5th April 2026
FEBRUARY 2026
With the 2025/26 tax year ending on 5th April 2026, now is the time to review pension contributions. Pensions remain one of the most tax-efficient ways to reduce taxable income, but the rules vary depending on earnings levels.
Below we summarise the key rules and planning opportunities before the tax year end.
Annual Allowance
For 2025/26, the standard annual allowance is £60,000.
This is the total amount that can be contributed to your pension(s) each tax year – including personal and employer contributions – without triggering an annual allowance charge.
Higher earners should be aware that this allowance may be reduced under the tapered annual allowance rules if:
- Threshold income exceeds £200,000, and
- Adjusted income exceeds £260,000
The minimum tapered allowance is £10,000.
How Much Can You Pay In?
You can normally receive tax relief on personal contributions up to:
- 100% of your UK relevant earnings, or
- £3,600 gross if you have low or no earnings
Even non-earners can contribute £2,880 net (£3,600 gross with tax relief added). This makes pensions a useful planning tool for spouses and families.
Carry Forward Opportunities
If you have unused annual allowance from the previous three tax years, you may be able to make larger contributions before 5th April 2026.
This is particularly valuable for:
- Company directors
- Individuals receiving bonuses
- Those with income above £100,000
- Pre-retirement planning
Why Timing Matters
Year on year, strategic pension contributions can help:
- Preserve the Personal Allowance where income exceeds £100,000
- Reduce exposure to higher or additional rate tax
- Mitigate the High Income Child Benefit Charge
- Improve overall tax efficiency
When it comes to planning long-term pension strategies, we also need to consider that (as announced in the the Autumn Budget 2025), from April 2029, only the first £2,000 of pension contributions made via salary sacrifice will be exempt from National Insurance Contributions (NICs). This change is aimed at making the tax treatment of salary sacrifice more consistent and sustainable.
If you would like us to review your position, please contact us as soon as possible. We always recommend at least giving attention to the following:
- Review total pension inputs for 2025/26
- Check whether tapering applies
- Consider carry forward
- Ensure contributions are made before the tax year ends
With careful planning, pensions can be one of the most powerful tax tools available – and we are here to ensure you make the most of the opportunities before the year end. We’re on 01642 606003.