Pension contribution calculator — methodology

A percentage becomes two amounts, and they are not interchangeable

your contribution     = salary × your percentage
employer contribution = salary × their percentage
total into the pension = the two added together

relief             is worked out on YOUR contribution only
the annual allowance is measured against the TOTAL

An employer contribution is relieved to the employer. It is their deduction against their own profits, it moves none of the member’s rate limits, and it never appears in the relief figure on this page. It does count in full towards the annual allowance, and it counts towards the adjusted income the allowance taper is decided on — so it can reduce the member’s allowance without ever having been the member’s money.

This is why the page calls the two engines separately rather than letting the relief composition run the allowance check for it. That composition measures an excess against the contribution it was asked to relieve, which is the member’s. On a page with an employer-match field that would understate the excess by exactly the employer’s contribution — the error that most flatters a reader heading for a charge.

Two income measures, and the taper needs both

threshold income = salary + other income − your own contribution
adjusted income  = salary + other income + your employer's contribution

the taper applies only when
    threshold income > its limit  AND  adjusted income > its limit

One formula covers both mechanisms. Under a net pay arrangement the member’s contribution has already left taxable pay and is added back for adjusted income; under relief at source the grossed-up contribution is deducted for threshold income. The two routes reach the same pair of figures from opposite directions.

Testing adjusted income alone is the classic error, and it is not a rounding difference. On £195,000 with an employer paying 40.00%, adjusted income is £273,000.00 — above its limit of £260,000 — while threshold income is £185,250.00, below £200,000. The allowance is £60,000.00 and not a penny has been tapered away. A calculator testing one measure would have taken tens of thousands of pounds of allowance off somebody who has all of it.

What the derivation leaves out is on the calculator page rather than only here: salary sacrifice arranged after 8 July 2015 is added back to threshold income, lump sum death benefits come out of adjusted income, and reliefs other than pension contributions reduce net income. A reader who holds their own figures should use those.

Three ways the allowance can be smaller, and they behave differently

• The taper. £1 of allowance for every £2 of adjusted income above £260,000, down to a floor of £10,000, and only when threshold income is above £200,000 as well. On £240,000 with those contributions the allowance falls to £52,000.00.
• The money purchase annual allowance — a flat £10,000 once a defined contribution pot has been flexibly accessed. It is not a reduced version of the standard allowance, which matters to how a page reports it: nothing is “tapered away”, because nothing was tapered, and a panel rendering the tapered-away figure as “allowance you have lost” would show nothing to the reader whose allowance is smallest.
• Rounding, which can make the flag true and the loss nil. PTM057100 rounds the reduction down to a whole pound, so a member £1 over both limits is in the taper branch with a completely untouched allowance. The page reads the amount lost, not the flag, before saying anything was lost.

Carry forward, which is not headroom

Unused allowance from the three previous tax years can be used once the current year’s allowance is exhausted. Three properties decide how it must be presented:

• It is used oldest year first, so the oldest row is the next to go.
• Each year’s share expires three years after it arose, whether or not anybody uses it.
• The allowance that applied in that year is the one that counts. Applying the current year’s figure to all three would overstate carry forward for anybody whose earlier years had a smaller allowance — the step from one standard allowance to another is worth tens of thousands, and enough to trigger a charge on its own.

So the page shows the working year by year rather than a total, and it never captions any of it as spare capacity. It is also off by default: this software does not know a reader’s history, and defaulting three years of contributions to nothing hands almost everybody the largest carry-forward figure available and calls it theirs.

Two limits, and only one of them costs money

relief limit      = the greater of relevant UK earnings and the basic amount
                    → the excess simply gets no relief

annual allowance  = the most that may go in with tax privileges
                    → the excess is relieved in full, then charged back

They are different sections of the same Act with different consequences and they bite at different amounts, and only the member’s own contribution is measured against the first. The charge on an annual allowance excess is not computed anywhere here. It falls at the member’s marginal rate on top of their other income and on a separate part of a tax return, and no HMRC source this software is built on settles that stacking cleanly enough to state a number. The excess and the marginal rate are both reported and are deliberately not multiplied together, because the product would look like an answer.

On £35,000 with the auto-enrolment shape, neither limit is anywhere near binding: £2,800.00 goes in against an allowance of £60,000.00. Most readers are in that position, which is exactly why the ones who are not need the panel to be unmissable.

Allowances, thresholds and rates

Carry forward reaches three years further back than this table, into years no calculator on this site otherwise models. The annual allowance for each of those years is verified separately and is recorded as its own row in the verification log below.

Sources

• gov.uk — Pension annual allowanceThe allowance, that it counts employer contributions, that the charge on an excess is at the member’s own rate, and carry forward from the three previous years.
• HMRC — Pensions Tax Manual PTM057100, the tapered annual allowanceThat both income measures have to be exceeded before the taper applies, and that the reduction is rounded down to a whole pound — which is why a member £1 over both limits is in the taper branch and loses nothing.
• gov.uk — Tax on your private pension contributions: pension tax reliefThe two mechanisms and the limit on relievable contributions, which is a different limit from the annual allowance.
• Finance Act 2004 s.190 — the limit on relievable contributionsThe greater of relevant UK earnings and the basic amount. Only the member’s own contribution is measured against it.
• gov.uk — Review of the automatic enrolment earnings trigger and qualifying earnings bandThe annual earnings trigger and the lower and upper limits of the qualifying earnings band. The Secretary of State held the 2025/26 figures for 2026/27.
• The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2021, article 3The figures for each pay reference period, prescribed in a table headed “Rounded figures”. They are deliberately not the annual figure divided, and they are not consistent with one another: fifty-two weekly upper limits do not add up to the annual one, and the four-weekly trigger is four times the weekly figure rather than a thirteenth of the annual. That is the Order rounding them, not an approximation by this site — the rules files store what is prescribed for each period and derive none of it.
• gov.uk — Workplace pensions: what you, your employer and the government payThe statutory minimum contribution rates, and that they are a percentage of qualifying earnings — a band — rather than of full pay. The page compares against them in money for that reason.
• gov.uk — Pension schemes rates and allowances
• gov.uk — Income tax rates and allowances: current and past

Six things this calculation does not model, stated here rather than buried

• The annual allowance charge. The excess is reported and the charge on it is not, for the reason above. It is the largest single figure this page declines to state.
• Defined benefit accrual. A defined benefit scheme’s pension input is the increase in the promised pension over the year, scaled, and not the contributions paid — so a member of one cannot get their annual allowance position from a percentage of salary at all. Somebody with both a defined benefit and a money purchase arrangement who has triggered the money purchase allowance has two limits at once, and the alternative allowance on the defined benefit side is not modelled.
• Salary sacrifice, which reduces pay itself, saves National Insurance, and is added back into threshold income when it was arranged after 8 July 2015. It has its own calculator on this site.
• Certification of an alternative basis. Qualifying earnings, whole pay and an entered figure are all supported, and the statutory minimum is compared in money. Whether a scheme on a basis other than qualifying earnings is certified as at least equivalent is a separate statutory calculation, and it is the one that settles compliance. This page does not perform it and does not conclude that a scheme falling below the figure shown is unlawful.
• Scheme membership in the carry-forward years, which is a condition of carrying anything forward and cannot be checked from anything this page asks for.
• Everything at the other end — growth, the lump sum allowance, the tax-free share and the income tax due when the money is taken.