HMRC has issued a message to state pensioners regarding private pension contribution limits after responding to a taxpayer inquiry on social media. The Labour government's tax arm clarified how much can be contributed during the 2026/2027 tax year for those retiring mid-year.
Taxpayer Inquiry and HMRC Response
A taxpayer, considering retirement at the end of April 2026, asked HMRC on social media: "If it [is] based on earnings for the year can I still use any unused allowance from previous years?" HMRC explained that for the 2026/27 tax year, the individual would have roughly one month of earnings. They stated: "You can personally contribute up to 100 per cent of your relevant UK earnings for the 2026/27 tax year." However, this is capped at the standard annual allowance of £60,000.
Annual Allowance Rules
Under current rules, you can contribute up to £60,000 into private pensions tax-free each financial year. This allowance is reduced if your threshold income exceeds £200,000 or your adjusted income surpasses £260,000. Unused allowances from previous years can be carried forward under certain conditions, but the annual cap still applies.
State Pension Considerations
When planning retirement finances, it is crucial to consider your state pension entitlement. To qualify for the full new state pension, you generally need 35 years of National Insurance contributions. The full weekly rate is £241.30, equating to just under £12,550 annually.
Martin Lewis, the BBC and ITV star, has offered insights on whether it is worthwhile to pay voluntary National Insurance contributions to fill gaps in your record.
State Pension Age Changes
The state pension age is gradually increasing from 66 to 67 between April 2026 and April 2028. Legislation also mandates a further rise from 67 to 68 between April 2044 and April 2046.
