Annual Allowance (AA)

You don't pay income tax on the money you pay into your pension. However, there is a limit on how much tax-free money you can build up in your pension in any one year. This limit is set by the government and is called the ‘annual allowance'. The Annual Allowance limit for 2017/18 is £40,000 for most people.  If your total annual income is greater than £110,000 your Annual Allowance may be less than £40,000.