1. Plan Your Halal Pension

Last reviewed: May 2026

Pension contributions are one of the most powerful tax-saving tools available to UK higher earners. The government tops up every pound you contribute with tax relief at your marginal rate.

The key rule: For every £80 you contribute to a personal pension, the government adds £20 (basic rate relief). If you're a higher-rate taxpayer, you can claim an additional £20 back via your Self Assessment tax return — meaning a £100 pension contribution effectively costs you just £60.
Step 1 of 4 — Select your tax rate
Step 2 of 4 — How do you contribute?
£
% of salary
£12,570£200,000
Step 3 of 4 — Your tax relief

Step 4 of 4 — Personalise your projection
£
30 yrs
Does your employer match contributions? Even 3% employer match on your salary adds thousands per year for free. Toggle it on above to see the difference.
Your Monthly Cost
What it costs you
HMRC Contributes
Free money
Total Going In
Working for you every month

Projected pot value

Illustrative only — not guaranteed. Inflation not accounted for.

2. Annual Allowance (2025/26)

The annual allowance is the maximum you can contribute to pensions in a tax year while still receiving tax relief.

AllowanceAmountNotes
Standard Annual Allowance £60,000 Includes employer contributions. Restored from £40,000 in April 2023.
Money Purchase Annual Allowance (MPAA) £10,000 Applies if you've flexibly accessed your pension (e.g. drawdown).
Tapered Annual Allowance £10,000 minimum Applies to high earners. See section 3.
Carry Forward Up to 3 prior years Use unused allowance from the previous 3 tax years.

Carry Forward — a powerful tool

If you haven't used your full annual allowance in the past 3 years, you can carry forward the unused amount and contribute more than £60,000 in a single year. This is particularly useful if you've received a bonus, sold a business, or have a large sum to invest.

Example: If you contributed £20,000 in each of the last 3 years (£40,000 unused per year), you could contribute up to £60,000 + £120,000 = £180,000 this year (subject to your earnings).

3. The Tapered Annual Allowance

If your income is high enough, your annual allowance is gradually reduced. This is called the tapered annual allowance.

1
Calculate your "threshold income"

Threshold income = total income (salary, dividends, rental income, etc.) minus your own pension contributions. If this is below £200,000, tapering does not apply.

2
Calculate your "adjusted income"

Adjusted income = threshold income + employer pension contributions. If this is below £260,000, tapering does not apply.

3
Apply the taper

For every £2 of adjusted income above £260,000, your annual allowance reduces by £1. The minimum tapered allowance is £10,000 (reached at £360,000 adjusted income).

⚠️ Important: Exceeding your annual allowance results in a tax charge at your marginal rate on the excess. If you're near the taper threshold, speak to a financial adviser before making large contributions.
⚠️ Disclaimer: This guide is for general information only and does not constitute financial or tax advice. Tax rules change frequently. Always consult a qualified financial adviser and/or tax specialist before making pension decisions. The figures used are based on 2025/26 tax year rules.