Autumn Budget 2026: what changed for your pension and tax relief

The short answer: The Budget on 28 October 2026 left pension tax relief alone. In 2026/27 and 2027/28 the annual allowance stays at £60,000, and you can still usually take 25% tax-free, up to £268,275. The changes are elsewhere: inheritance tax on pensions from April 2027, an end to the two-year rule, and a new Pension Tax Allowance.

The quick version

• Tax relief on what you pay in hasn't changed.

• The £60,000 annual allowance and £268,275 tax-free cash cap stay the same next year.

• Unused pensions still count for inheritance tax from 6 April 2027. That was already law.

• Death benefits paid from 28 October 2026 won't become taxable just for being paid late.

• A new Pension Tax Allowance means some pensioners on low incomes pay no Income Tax from April 2027.

What did the Autumn Budget 2026 change for pensions?

Very little for the money you pay in. The Budget was delivered on Wednesday 28 October 2026, and the rates and allowances tables in Annex A show the same pension limits for 2027/28 as for this year.

Pension tax relief means the government adds back the Income Tax on money you pay into a pension. For a basic-rate taxpayer, every £80 you pay in becomes £100 in your pot.

Capital at risk. The value of your pension can go down as well as up, and you may get back less than you pay in.

Tax treatment depends on the individual circumstances of each client and may be subject to change in future.

Figures are from Annex A. Income Tax rates are for England, Wales and Northern Ireland, as Scotland sets its own bands.

Is pension tax relief changing after the Budget?

No. The Red Book (the main Budget document) says there's no increase to the headline rates of income tax, and the list of tax measures has nothing that changes the rates of relief.

So the GOV.UK rules on tax relief still apply:

• You can get relief on payments worth up to 100% of your yearly earnings.

• In a personal pension, your provider claims 20% from the government and adds it to your pot (this is called relief at source).

• If you don't earn anything, relief is still added on up to £2,880 a year that you pay in.

• The annual allowance is £60,000, and you may be able to carry forward unused allowance from the last 3 tax years.

Rumours about cutting relief turn up before most Budgets, a bit like Christmas adverts in October. Before this one, AJ Bell asked the Chancellor to commit "not to change tax relief or tax-free cash for the long term". The Budget made no long-term promise, but it didn't change anything this time. Our guide to how tax relief on personal pensions works has the full picture.

Can I still claim 40% tax relief on my pension?

Yes. If you pay 40% Income Tax in England, Wales or Northern Ireland, the GOV.UK rules let you claim an extra 20% on top of the 20% your provider adds. That covers payments up to the amount of income you paid 40% tax on. If you pay 45%, you can claim an extra 25%.

Your provider only claims the first 20%, so you claim the rest in one of two ways:

1. On your Self Assessment tax return, if you fill one in.

2. Through your tax code, using HMRC's claim service, if you don't.

Scotland has different bands, so the extra relief there is 1%, 22%, 25% or 28%, depending on the band you pay.

Example: an £8,000 payment by a higher-rate taxpayer, worked through

These figures are made up, to show how it works.

Sam lives in England and pays 40% tax on £15,000 of her income. She pays £8,000 from her bank account into her personal pension.

• Her provider adds 20% basic-rate relief: £2,000. Her pot gets £10,000 in total.

• She paid 40% tax on more than £10,000 of income, so she can claim an extra 20% of £10,000: £2,000.

• She claims it on her tax return, so her tax bill is £2,000 lower.

So £10,000 lands in Sam's pension, and it costs her £6,000, just as it did before the Budget. For the self-employed, we explain whether paying into a pension cuts your tax bill.

Is the 25% tax-free lump sum changing?

No. You can still usually take up to 25% of a pension tax-free, and GOV.UK puts the most you can take at £268,275. Annex A shows that cap is the same for 2027/28.

One small change helps people who are very ill. A serious ill-health lump sum will be allowed where someone can be expected to live for less than a year. Parliament still has to pass it in the Finance Bill.

What changes for pensions when someone dies?

This is where the real changes are. It isn't an easy thing to think about, so here are the two points in plain terms.

Inheritance tax from 6 April 2027 is going ahead. Most unused pension money will count as part of someone's estate for inheritance tax from that date, and the Budget papers confirm this is already law. What's new is that the person sorting out the estate can ask the scheme to pay the inheritance tax to HMRC directly, if certain conditions are met.

The two-year rule is going. Until now, some tax-free death benefits became taxable if they were paid more than two years after the scheme found out about the death. HMRC says that won't happen any more just because a payment is late. It applies to payments made on or after 28 October 2026, once the Finance Bill becomes law.

What is the new Pension Tax Allowance?

It's a tax cut for some people over State Pension age. From April 2027, the full new State Pension rises to £13,036.40 a year, which is more than the £12,570 Personal Allowance. So someone with only the State Pension would otherwise pay a little tax.

The Pension Tax Allowance explainer says:

• If your total income is up to £13,037, you pay no Income Tax. The allowance is worth up to £94.

• Between £13,037 and £13,319, you get part of it.

• At £13,319 or more, you get none.

• It's automatic, with no claim needed.

It counts all your income, not just the State Pension, and it's only for three tax years, from 2027/28 to 2029/30.

What pension changes were already decided before the Budget?

A few big changes were already set, and the Budget kept them:

• Inheritance tax on pensions from 6 April 2027, as above.

• The salary sacrifice cap. From April 2029, only the first £2,000 a year paid in through salary sacrifice will be free of National Insurance. It still gets Income Tax relief. If you're a sole trader, you won't be using salary sacrifice, so it won't change how you pay into your own pension.

• The Triple Lock. The full Triple Lock stays until April 2029. From April 2030, the Red Book says the State Pension will rise by the highest of 2.5%, inflation, or the amount needed to keep its value against earnings. Our guide to how the triple lock change affects you goes into more detail.

Two more things are coming. The Pensions Commission's final report is due in February 2027. And new rules to help bring small pots together, and set up default retirement options called Guided Retirement, will come in a future Finance Bill.

Do I need to do anything differently with my pension now?

For most people, no. Everyone's situation is different, so we can't say what's right for you. Here are some free checks that might help:

1. Check you're getting your full relief. If you pay 40% or 45% tax, make sure you claim the extra on your tax return or through your tax code.

2. See how much allowance you have left. Add up what you and anyone else paid in this tax year. Remember carry forward from the last 3 years.

3. Check who you've named to get your pension. With inheritance tax coming in April 2027, it's worth a look at the form your provider holds.

4. Check your State Pension forecast to see what you're on track for.

5. Get free guidance if you're 50 or over. Pension Wise from MoneyHelper is free and impartial, and explains your options for taking money from a defined contribution pension.

To see how different amounts could add up over time, try our flexible pension calculator.

Still got questions?

Does the £60,000 annual allowance include tax relief? Yes. The allowance covers the total paid into your pensions, including relief and anything your employer pays. In Sam's example, £10,000 counts towards it, not £8,000.

Is the State Pension now tax-free? No. The Pension Tax Allowance only helps people whose total income is under £13,319, and only until April 2030. The explainer is clear that it doesn't make the State Pension permanently tax-free.

Can I still carry forward unused allowance? Yes. You might be able to carry over allowance you didn't use in the previous 3 tax years.

I don't pay Income Tax. Do I still get relief? Yes. Your provider can claim 20% on up to £2,880 a year that you pay in, so £2,880 becomes £3,600 in your pot.

When does all this become law? The new measures are going into the Finance Bill 2026-27, which Parliament still has to pass. Inheritance tax on pensions is already law.