The maximum amount you can pay into your pension is £60,000 a year spread across all of your pensions, not just your Penfold pension. If you make any payments into your pension that exceeds this amount, you will have to pay a tax charge at your average tax rate.
Depending on whether you're earning or not, there are two different maximum amounts you can pay into your pension and receive the government's tax relief. See below.
I'm not earning
If you're not earning any UK relevant earnings (employment income such as pay, wages, bonus, overtime & commission that is taxable), then the maximum you can contribute into your pension each year is a total of £2,880. This contribution will receive the government's 25% tax relief of £720 to make a total £3,600 contribution into your pension.
There are limits to how much you can pay into your pension and still get tax relief on those payments.
The first limit is that you can only contribute your total annual income within the tax year into your pension - this includes any government tax relief top up that you'll receive. For example, if you earned £30,000 a year, you can only pay a maximum of £24,000 into your pension, as it will receive the government's 25% tax relief top up - £6,000, totalling your overall pension contribution to £30,000 which is equal to your annual earnings.
If you pay in more than what you earned within that year (up to £60,000), you will not be subject to a tax charge, but you will have to get in touch with HMRC to return the tax relief that we claimed on your behalf.
The second limit is that you can only contribute up to £60,000 into your pension per tax year - again this includes any tax top ups that you'll receive. So even if your income is above £60,000, £48,000 is the maximum amount you’re allowed to contribute into your pension in a tax year, as you'll receive a £12,000 tax top-up.
If you're unsure about how much you should be saving into your pension, read our blog "How much money should I pay into my pension" or visit our calculator to have a play around with how much you could have when you come to retire.