Limits on how much you can save
You have to stay within limits set by HM Revenue & Customs to benefit from tax relief on your pension savings. The Plan Cap also restricts what salary you can pay certain contributions on.
- The M Plan Cap is a limit set by the Trustee; it restricts how much you can contribute to your pension in any given year.
- The Annual Allowance is a limit set by HMRC; you will have to pay tax on contributions you make over the Annual Allowance.
- When you access your pension, you can usually take up to 25% of it as a tax-free lump sum. Your ‘Lump Sum Allowance’ is the maximum amount of money you can take as tax-free lump sums from all the pensions you have. While you can still take out money over this allowance, you will need to pay income tax on it. The Lump Sum Allowance is £268,275. It will be higher if you have any protected tax-free lump sums, or a protected lifetime allowance.
M Plan Cap
The M Plan Cap restricts the contributions to, and the benefits paid from your pension.
If your Pre You* salary is above the M Plan Cap, your M Plan Smart* contributions will be restricted by the Cap. Any ASCs/AVCs you pay will not be restricted to the Cap.
The limits are shown in the table below:
Tax year
M Plan Cap
2025/2026
£460,800
2024/2025
£447,600
2023/2024
£410,400
2022/2023
£363,600
2021/2022
£345,600
Tax limits
When you’re thinking of how much to contribute, you should bear in mind that there is a limited amount you can pay without incurring a tax charge.
Generally, you can pay in the equivalent of your entire annual salary each year (or up to £3,600 if this is more) and get tax relief. However, the government has put in place an annual allowance which includes any money that you pay in and any money that an employer pays in on your behalf, to this plan or any other pension plans you may have. If you exceed the annual allowance you will pay tax on any amount paid above it.
These allowances can change with each new tax year, depending on what the government sets out. Our Tax Year Rates and Allowances bookletOpens in new tab will keep you up to date on what these allowances are, and how they could affect you.
