Tax allowances

You benefit from income tax relief on your pension contributions. The money you pay in is taken from your salary before you pay any income tax on it, making it go further.

Your pension contributions may be made via salary sacrifice. This is an arrangement between you and your employer, where you agree not to receive a certain element of pay and your employer instead pays this amount directly into your pension.

Both you and your employer potentially save on National Insurance contributions with such an arrangement (as well as you not paying income tax on the amount). There are tax implications however, if you go over certain limits.

There are also other tax allowances that apply; see the list below for more details.

If you are a Final Salary member, Additional Voluntary Contributions can also be made via salary sacrifice.

If you are an RBP member, Additional Contributions to your retirement balance account can also be made via salary sacrifice.

For UPP members, any additional personal contributions paid as lump sums direct to Fidelity (not via payroll) will qualify for tax relief at the basic rate of income tax. If you are a higher rate taxpayer, you may be able to claim additional tax relief by direct notification to HMRC or by completing the relevant section of your self-assessment tax return.

The Annual Allowance (AA) is the maximum amount of pension benefit you can build up or save into all of your pension arrangements each tax year before tax will be charged.

It is usually either 100% of your earnings or the AA limit for that tax year, whichever is lower.

The standard AA limit for the 2025/2026 tax year is £60,000.

The amount of benefit you build up in your Uniper pension in the tax year is called your Pension Input Amount (PIA). This is measured against the Annual Allowance.

You are responsible for letting HMRC know if your PIA exceeds the Annual Allowance. This can usually be done via self-assessment. 

Your Annual Benefit Statement (ABS) from your pension scheme will give you an indication of how much of the AA you have used in respect of your savings in that particular scheme. For ESPS members, if your PIA is more than the standard Annual Allowance, you will receive a Pension Savings Statement (PSS) from your pension administrator, Broadstone. However, you will need to factor in any savings you have built up in other pension schemes that you are a member of separately.

You can usually carry forward any unused Annual Allowance from the previous three tax years.

If you are a Final Salary or RBP member in the ESPS and are liable for an Annual Allowance tax charge, you can elect for the Trustees to pay some, or all, of the charge on your behalf, rather than paying it directly to HMRC. Please see the relevant Scheme Pays pages for more details:

• Final Salary - Scheme Pays page
• RBP - Scheme Pays page

If you are a UPP member please contact the administrator, Fidelity, for more information about Scheme Pays and whether it would apply to you.

If you have already taken money from a defined contribution (DC) pension pot, the Money Purchase Annual Allowance (MPAA) is the total amount you can still pay into any DC pension arrangements, such as the UPP or Additional Voluntary Contributions (AVCs), each tax year, before tax will be charged. 

The MPAA limit for the 2025/2026 tax year is £10,000. 

The MPAA only comes into effect if you have already taken some of your defined contribution pension savings as cash or a short-term annuity from a flexi-access drawdown fund, cash from a pension pot ('uncrystallised funds pension lump sums', or UFPLS) or if you have taken more than the limit from a capped drawdown fund.

The MPAA only applies to payments into defined contribution pension arrangements, such as the UPP or Additional Voluntary Contributions (AVCs). Pension savings built up in defined benefit arrangements, such as the ESPS Final Salary and RBP categories, do not apply. These remain subject to the Annual Allowance limit.

Your Annual Allowance (AA) will only be tapered if you are a high earner.

You can check if the Tapered Annual Allowance applies to you by visiting  www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance. 

Historically, the Lifetime Allowance (LTA) was the maximum amount you could build up in all of your registered pension savings throughout your working life before you had to pay additional tax.

It was abolished from 6 April 2024.

With the abolition of the LTA there is no limit on the total amount of pension savings you can build up. Lump sum limits or allowances were introduced in place of the LTA. These affect how much lump sum can be paid or transferred without tax charges.

The Lump Sum Allowance (LSA) limits the tax-free cash or lump sum you can receive from all your pensions. If you have an LTA protection, you may have a higher lump sum allowance (see Lump Sum Allowance below).

You can check if you have an LTA protection in your Government Gateway account. You can also find more information about protection, and how to apply for it, by visiting www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance.

For further information about the LTA and other limits, please visit gov.uk/tax-on-your-private-pension or select the following drop downs:

• Lump Sum Allowance (LSA)
• The Lump Sum and Death Benefits Allowance (LSDBA)
• Overseas Transfer Allowance (OTA)

You may wish to take financial advice if you are concerned about how the changes to the LTA and other limits may impact you.

The LSA is a cap on the total amount of tax-free lump sum you can receive from all your registered pension arrangements.

The standard LSA for the 2025/2026 tax year is £268,275.

If you have an LTA protection, you may have a higher allowance. You can check if you have an LTA protection in your Government Gateway account.

If the only pension arrangement you are a member of is your Uniper pension, you only need to consider whether the total tax-free lump sum you want to take from your scheme or plan is more than your available LSA.

If you have previously taken pension benefits from either your Uniper pension arrangement or another scheme, this will need to be taken into account and will reduce the available LSA for future retirements.

The LSDBA is a new allowance introduced in the UK from 6 April 2024, following the abolition of the Lifetime Allowance. It limits the amount of tax-free lump sums that can be paid from registered pension schemes during an individual's lifetime and on their death before age 75.

If the value of lump sum death benefits payable exceeds the LSDBA, then the excess may be taxed at the marginal rate of income tax of the person receiving it.

The standard LSDBA for the 2025/2026 tax year is £1,073,100.

If you have an LTA protection, you may have a higher allowance. You can check if you have an LTA protection in your Government Gateway account.

This only applies to transfers out to a Qualifying Recognised Overseas Pension Scheme. 

The OTA limit for the 2025/2026 tax year is £1,073,100.

If you have an LTA protection, you may have a higher allowance. You can check if you have an LTA protection in your Government Gateway account.

If the transfer value exceeds the OTA, there will be an overseas transfer charge (OTC) of 25%.