Normally you can pay as much into your pension as you earn each year, up to a maximum of £40,000. This is known as your annual allowance. Transferring pensions between providers doesn't use up your annual allowance. The usual £40,000 annual allowance is cut for people with annual income of more than £150,000. The allowance reduces by £1 for every £2 of income above £150,000, down to a minimum of £10,000 for those with income of more than £210,000. Non-taxpayers and children can also make pension contributions of up to £2,880 a year (making £3,600 with basic-rate tax relief).

The lifetime allowance is a limit to the amount you can save in your SIPP or other pension over your lifetime. The allowance is currently £1.03 million – you will pay tax on any pension savings you make in excess of this. The excess is taxed at 25% (plus Income Tax) as income or 55% as a lump sum.

Pension carry forward rules let you make contributions above your annual allowance. If you paid in less than your annual allowance in any of the past three tax years you can carry forward the unused allowance, as long as you had a SIPP or other pension in place for each of the three years and your total contributions don’t exceed your current earnings.