Your Tapered Annual Allowance
Frequently Asked Questions
What is the tapered annual allowance?
The tapered annual allowance reduces your pension annual allowance if you are a high earner. For 2026-27, tapering applies if your threshold income exceeds £200,000 and your adjusted income exceeds £260,000. For every £2 of adjusted income above £260,000, your annual allowance is reduced by £1, down to a minimum of £10,000.
What is threshold income?
Threshold income is broadly your net income for the tax year, before deducting personal pension contributions but after deducting salary sacrifice contributions made from 9 July 2015 onwards. If your threshold income is £200,000 or below, you are not subject to tapering regardless of your adjusted income.
What is adjusted income?
Adjusted income is your threshold income plus all pension contributions — both yours and your employer's. This includes defined benefit pension accrual (measured as 16 times the annual benefit increase). If your adjusted income is above £260,000, tapering will reduce your annual allowance.
What is the minimum tapered annual allowance?
The minimum tapered annual allowance is £10,000, which applies once adjusted income reaches £360,000 or above. Between £260,000 and £360,000 of adjusted income, the allowance tapers from £60,000 down to £10,000 at a rate of £1 reduction for every £2 of excess adjusted income.
Can I carry forward if I have a tapered allowance?
Yes, carry forward is still available even if you have a tapered annual allowance. However, the carry forward is based on the tapered allowance that applied in each prior year, not the standard £60,000. This means your carry forward may be smaller than expected if you were subject to tapering in previous years. You should check your annual allowance for each prior year carefully.