Find out if tapering reduces your pension annual allowance. Enter your threshold income and adjusted income to calculate your exact limit for 2025/26.
Auto-fill tip: If you know your adjusted income, enter it directly. Otherwise enter threshold income + employer contributions separately and click Calculate — adjusted income will be computed for you.
Threshold Income
Adjusted Income
Tapering Applies?
Your Annual Allowance
Reduction from Taper
Total Pension Contributions
Effective Limit (incl. carry forward)
Remaining Allowance
Annual Allowance Charge
Understanding the Tapered Annual Allowance 2025/26
The tapered annual allowance is a restriction that reduces the standard £60,000 pension annual allowance for high earners. It was introduced in April 2016 and significantly reformed in April 2020. For 2025/26, the rules remain unchanged from 2023/24 onwards: the taper kicks in when both the threshold income and adjusted income limits are breached.
The Two Tests — Threshold Income & Adjusted Income
Tapering only applies if you breach both conditions:
Test 1 — Threshold income exceeds £200,000. Threshold income is broadly your total income (employment, self-employment, property, savings, dividends) minus your own personal pension contributions (but not employer contributions).
Test 2 — Adjusted income exceeds £260,000. Adjusted income = threshold income + all employer pension contributions paid on your behalf. This is the figure used to calculate the actual taper reduction.
If your threshold income is £200,000 or below, tapering does not apply regardless of adjusted income — this "anti-forestalling" rule protects people who make large personal pension contributions.
Key distinction: Threshold income uses net pension contributions (after deduction), whereas adjusted income adds back all employer contributions. Always use gross figures from payslips and pension statements.
How the Taper Is Calculated
Once both tests are failed, the £60,000 annual allowance reduces by £1 for every £2 of adjusted income above £260,000. The minimum tapered annual allowance is £10,000, which is reached when adjusted income hits £360,000 or above.
Formula: Tapered AA = £60,000 − [(Adjusted Income − £260,000) ÷ 2]
Adjusted Income
Tapered Annual Allowance
Reduction
£260,000 or below
£60,000 (full allowance)
None
£280,000
£50,000
−£10,000
£300,000
£40,000
−£20,000
£320,000
£30,000
−£30,000
£340,000
£20,000
−£40,000
£360,000+
£10,000 (minimum)
−£50,000
Historic Taper Thresholds
Tax Year
Threshold Income
Adjusted Income
Minimum AA
2016/17 – 2019/20
£110,000
£150,000
£10,000
2020/21 onwards
£200,000
£260,000
£10,000
2025/26
£200,000
£260,000
£10,000
Carry Forward and the Tapered Allowance
You can carry forward unused annual allowance from the previous three tax years to top up your tapered limit — but note that the carry forward amount is based on the allowance actually available in each prior year (which may itself have been tapered). This makes the calculation complex for consistent high earners.
For example, if your tapered AA has been £20,000 for three years and you have used it all, you cannot carry forward anything extra. Use our Carry Forward Pension Calculator to model prior-year unused amounts.
Annual Allowance Tax Charge
If your total pension contributions (employer + employee, across all schemes) exceed your tapered annual allowance (plus any carry forward), the excess is added to your taxable income and charged at your marginal rate — 20%, 40%, or 45%. You report this on your Self Assessment tax return. Scheme pays may be available if the charge exceeds £2,000 and the excess exceeds £10,000.
Planning Around the Taper
Common strategies for those affected include:
Increasing personal pension contributions to reduce threshold income below £200,000 (since personal contributions reduce threshold income)
Timing employer contributions across tax years to stay below the adjusted income trigger
Requesting salary sacrifice arrangements — these reduce both threshold and adjusted income
Reviewing DB pension accrual rate options with your scheme administrator
How the Tapered Annual Allowance Calculator Works
This calculator applies the 2025/26 HMRC taper rules to your income figures. Enter your threshold income (your net income before adding back employer contributions) and adjusted income (threshold income plus all employer pension contributions). The tool then applies the £1-for-£2 taper formula to derive your exact annual allowance.
If you enter your threshold income and employer contributions separately, the calculator derives adjusted income automatically. Alternatively, enter adjusted income directly if you have already calculated it (for example from a pension input statement or your accountant's figures).
Key Figures for 2025/26
Standard annual allowance: £60,000. Threshold income trigger: £200,000. Adjusted income trigger: £260,000. Minimum tapered allowance: £10,000. Taper rate: £1 reduction per £2 of adjusted income above £260,000. Carry forward: up to three prior tax years (2024/25: £60,000; 2023/24: £60,000; 2022/23: £40,000).
Worked Example
A senior NHS consultant earns £220,000 salary (threshold income). Their employer contributes £80,000 to their DB pension. Adjusted income = £220,000 + £80,000 = £300,000. Taper reduction = (£300,000 − £260,000) ÷ 2 = £20,000. Tapered AA = £60,000 − £20,000 = £40,000. If their pension input amount is £45,000, they have a £5,000 excess — charged at their marginal rate of 45%, giving a £2,250 annual allowance charge. Scheme pays is available as both thresholds (£2,000 charge, £10,000+ excess) are met.
Source: Based on official HMRC 2025/26 taper rules. Last updated March 2026.
Frequently Asked Questions
What is the tapered annual allowance in 2025/26?
The standard annual allowance is £60,000 for 2025/26. Tapering reduces this by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000 for those with adjusted income above £360,000. You must also have threshold income above £200,000 for tapering to apply.
Who is affected by the tapered annual allowance?
The tapered annual allowance affects high earners with threshold income above £200,000 and adjusted income (including employer pension contributions) above £260,000 per year. If your threshold income is £200,000 or below, tapering does not apply even if your adjusted income is higher.
How do I calculate my tapered annual allowance?
Step 1: Check if your threshold income exceeds £200,000. Step 2: Calculate your adjusted income (threshold income + employer pension contributions). Step 3: If adjusted income exceeds £260,000, reduce your £60,000 allowance by £1 for every £2 above £260,000. Minimum allowance is £10,000. Example: Adjusted income of £310,000 → reduction of (£310,000 − £260,000) ÷ 2 = £25,000 → tapered AA of £35,000.
What happens if I exceed the annual allowance?
You pay an annual allowance charge at your marginal income tax rate (20%, 40%, or 45%) on the excess. You can use carry forward from the three previous tax years if your allowance wasn't fully used in those years. If the charge exceeds £2,000 and the excess exceeds £10,000, you can ask your pension scheme to pay via scheme pays.
What is the difference between threshold income and adjusted income?
Threshold income is broadly your total net income minus personal pension contributions you make yourself (but not employer contributions). It acts as a "gateway" test — if it is £200,000 or below, tapering cannot apply. Adjusted income adds back all employer pension contributions to threshold income and is the figure used to calculate the actual taper reduction.
Can I use carry forward to increase my tapered annual allowance?
Yes — but carry forward is limited to the allowance you actually had in each prior year, which may itself have been tapered. In 2025/26, you can carry forward from 2024/25 (up to £60,000, or less if tapered), 2023/24 (up to £60,000, or less if tapered) and 2022/23 (up to £40,000, or less if tapered). Only unused allowance counts. You must have been a member of a registered pension scheme in each year you carry forward from.
Does the taper apply to defined benefit (DB) pension members?
Yes. The taper applies regardless of pension type. For DB members, employer contributions are not paid directly into a pot — instead, the pension input amount (based on the increase in the value of your promised pension × 16) counts towards the annual allowance. High-earning DB members, particularly in the NHS, teachers' and other public sector schemes, are often the most affected by tapering.
Financial tools specialist at UKCalculator. Mustafa builds accurate, regulation-aligned UK tax and pension calculators to help individuals navigate complex financial rules. Updated for 2025/26 tax year. Last reviewed: March 2026.