SIPP contribution limits and tax relief

In ^{_current_tax_year_yyyy_yy}, you can usually tax-efficiently pay up to ^{_annual_allowance} into a Self-Invested Personal Pension (SIPP).

You can also typically claim tax relief on up to 100% of your salary, capped at ^{_annual_allowance}.

However, this could differ depending on your circumstances.

In this guide, find out how SIPP tax relief and contribution limits work.

Tax relief on SIPP contributions

A SIPP’s a form of personal pension where you have more control over how your money’s invested.

With most personal pensions, you pick an investment plan or fund, or stick with your provider’s default. But with a SIPP, you can choose individual investments.

That gives you greater flexibility in how your retirement savings are invested. However, it also means you need the knowledge to make sensible investment decisions. Otherwise, you could have less at retirement than you expect.

Like all defined contribution pensions, you can receive tax relief on eligible personal contributions to a SIPP.

Pension tax relief means the government tops up your pot based on your marginal rate of Income Tax.

There are two main ways this is usually applied:

Net pay - you pay into your pot directly from your salary before tax.
Relief at source - you pay into your pension and receive tax relief as a top up on your contributions.

SIPPs typically use relief at source.

In this case, your pension provider claims the basic rate (^_basic_rate) tax relief from HMRC and adds it to your pot.

So, if you pay £800 into your SIPP, the government adds £200, making the total contribution £1,000. That’s a 25% tax top up on your contribution.

Higher and additional rate taxpayers can claim further relief, too. That’s usually via Self-Assessment, or a change to your tax code.

Higher rate (^_higher_rate) taxpayers get an extra 20% relief. So, a £1,000 contribution effectively costs you £600.

Meanwhile, additional rate (^{_additional_rate}) taxpayers get a further 25% relief. That makes the cost of a £1,000 contribution just £550.

Tax relief is one of the biggest benefits of saving into a SIPP. It gives your contributions a boost while cutting your tax bill.

SIPP contribution and tax relief limits

SIPPs also have the same contribution and tax relief limits as other pensions.

There are a couple of contribution allowances to be aware of.

Annual allowance

First, there’s the annual allowance. That’s the limit on the gross amount that can be saved into a pension each tax year without incurring tax charges.

In ^{_current_tax_year_yyyy_yy}, the standard annual allowance for pension contributions is ^{_annual_allowance} - this includes personal, employer and any third party contributions.

You can save up to ^{_annual_allowance} per year into a pension while still receiving tax relief on personal and third party contributions. Tax relief isn’t applied to employer contributions.

Low and non-earners can usually pay up to ^{_low_earner_annual_allowance_gross} into a pension (^{_current_tax_year_yyyy_yy}), and can benefit from basic rate tax relief. So, a ^{_low_earner_allowance_annual_net} contribution would be topped up to ^{_low_earner_annual_allowance_gross}.

If you make contributions above your annual allowance, you’ll usually be subject to an annual allowance tax charge. That removes the tax benefit of saving into your SIPP.

You may have a higher annual allowance

You may be able to carry forward unused annual allowance from the previous three tax years.

In ^{_current_tax_year_yyyy_yy}, that means you can go back to ^{_tax_year_minus_three}. You must use your allowance in the current tax year first, before then going back to the earliest year with unused allowance.

For example, imagine that you’ve contributed ^{_annual_allowance} to your pension this year already. However, you contributed £40,000 last tax year (2025/26).

In that case, you could carry forward £20,000 of your allowance from last year.

To use carry forward, you must have been a member of a registered pension scheme in the years you're carrying forward from.

You may have a reduced annual allowance

Your annual allowance may also be reduced. Here’s how.

If you have high earnings - if both your adjusted income exceeds ^{_adjusted_income} and your threshold income exceeds ^{_threshold_income}, you may be subject to the tapered annual allowance. This sees your annual allowance reduced by £2 for every £1 your adjusted income’s above ^{_adjusted_income}, down to a minimum of ^{_min_tapered_annual_allowance}. That’ll happen if your adjusted income is ^{_max_adjusted_income} or more, and your threshold income’s above £200,000.
If you’ve already flexibly accessed your pension - if you flexibly access the taxable part of your pension (from 55, rising to 57 from 2028), you could be subject to the money purchase annual allowance (MPAA). This reduces your annual allowance to ^{_money_purchase_annual_allowance} a year (^{_current_tax_year_yyyy_yy}). Once triggered, it can’t be reversed.

Tax relief limit

Alongside the annual allowance, there’s a separate limit on tax relief. You can receive tax relief on personal and third party contributions up to 100% of your salary, capped at ^{_annual_allowance} per year (^{_current_tax_year_yyyy_yy}).

You won’t receive tax relief on contributions you make above this threshold.

If you’ve triggered the MPAA, your reduced annual allowance of ^{_money_purchase_annual_allowance} is inclusive of tax relief.

SIPP tax-efficient withdrawal limits

There are also limits to be aware of when accessing your SIPP (from 55, rising to 57 from 2028).

Previously, there was a pension lifetime allowance (LTA). The LTA used to limit the total amount you could have in your pension before you’d pay an additional tax charge when accessing your savings.

However, it was abolished in 2024 replaced with three new thresholds:

Lump sum allowance (LSA) - from 55 (57 from 2028), you can take up to 25% of your total pension savings (across all pots) tax-free. This is capped by the LSA. In ^{_current_tax_year_yyyy_yy}, this is ^{_lump_sum_allowance}.
Lump sum and death benefit allowance (LSDBA) - this limits the number of tax-free lump sum benefits you and your beneficiaries can receive from your pensions. In ^{_current_tax_year_yyyy_yy}, this is ^{_lump_sum_death_benefits_allowance}.
Overseas transfer allowance (OTA) - this limits the tax-free amount you can transfer into an overseas pension scheme. In ^{_current_tax_year_yyyy_yy}, this is ^{_overseas_transfer_allowance}.

SIPP: balancing flexibility and investment risk

SIPPs are different to other pensions as you choose your investments. That gives you more control over how your pension’s invested.

However, you’ll need to be comfortable doing so. Any mistakes you make with your pension investments could result in a lower balance than you expect or need for retirement.

That usually makes SIPPs more suitable for confident and experienced investors.

If you’re unsure which type of pension’s right for you, consider speaking to an Independent Financial Adviser (IFA).

Frequently asked questions

SIPP tax relief sees the Income Tax on your pension contribution paid into your pot instead.

You’ll receive tax relief at your marginal rate of Income Tax. In ^{_current_tax_year_yyyy_yy}, that’s ^_basic_rate for basic rate taxpayers, ^_higher_rate for higher rate taxpayers, and ^{_additional_rate} for additional rate taxpayers.

You can receive tax relief on personal and third party contributions up to 100% of your salary, capped at ^{_annual_allowance} per year (^{_current_tax_year_yyyy_yy}).

How long it takes for SIPP tax relief to be paid depends on how you contribute to your pot.

For relief at source, your provider will usually claim the basic rate for you. This is usually paid 6-11 weeks after you contribute. You’ll need to claim higher and additional rate relief separately via a Self-Assessment tax return or tax code change.

For net pay schemes, you contribute directly from your salary or income before paying tax.

Your pension provider will usually claim basic rate relief for you.

Higher and additional rate taxpayers can then claim further SIPP tax relief via a Self-Assessment tax return. You can also contact HMRC and get your tax code adjusted.

Yes, you can carry forward unused annual allowance from up to the previous three tax years. In ^{_current_tax_year_yyyy_yy}, that means you can go back to ^{_tax_year_minus_three}. You must have fully used your annual allowance in the current tax year, before then going back to the earliest.

Yes. Those with low or no earnings have a pension annual allowance of ^{_low_earner_annual_allowance_gross} (^{_current_tax_year_yyyy_yy}). That includes basic rate tax relief. So, if you contribute ^{_low_earner_allowance_annual_net}, it’ll be topped up to ^{_low_earner_annual_allowance_gross}.

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Risk warning

As always with investments, your capital is at risk. Past performance is not an indicator of future performance. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 20-07-2026