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What happens if I go over my annual allowance?

If you go over your annual allowance, you'll normally face a tax charge that takes back any excess tax relief you’ve received. You can work out your charge by adding the amount you have gone over the annual allowance (less any carry-forward amounts, if available) to your taxable income for the year. The annual allowance charge is then calculated at your highest tax rate.

If you’re required to pay an annual allowance charge, you may have to pay the charge directly to HMRC through self-assessment. In certain conditions, it’s possible to pay the charge from your pension savings. This is known as Scheme Pays.