Annual & tapered allowance checker
High earners lose part of their £60,000 pension allowance. This checks whether the taper applies to you, how far it cuts your allowance, and whether a tax charge is likely.
Your planned contribution is £10,000 over the allowance. Check carry-forward from the last three tax years before assuming a charge is due.
How the allowance and the taper work
The annual allowance is the cap on pension saving that still attracts tax relief each year, counting your contributions, any employer contributions and, for a defined benefit scheme, the growth in your promised pension. For most people it is £60,000. Two rules can lower it: the high-income taper, and the Money Purchase Annual Allowance once you have flexibly accessed a pot.
The taper has a deliberate two-part gate. It bites only when threshold income is over £200,000 and adjusted income is over £260,000. Meet both and your allowance falls by £1 for every £2 of adjusted income above £260,000, down to a floor of £10,000 once adjusted income reaches £360,000.
| Standard annual allowance (2026/27) | £60,000 |
| Taper starts (adjusted income) | £260,000 |
| Minimum tapered allowance | £10,000 at £360,000 adjusted income |
| Money Purchase Annual Allowance | £10,000 |
Worked example
Take someone with threshold income of £220,000 and adjusted income of £290,000. Both gates are passed, so the taper applies. Adjusted income is £30,000 above £260,000, which cuts the allowance by half that, £15,000. The available allowance is therefore £45,000. A planned £55,000 of pension saving would be £10,000 over the limit, so a charge is likely unless carry-forward from earlier years covers the excess.
Before you assume a charge
- Check carry-forward. Unused allowance from the previous three tax years can be added to this year, and it often removes the charge entirely.
- Get the income figures right. Threshold and adjusted income have precise rules on what counts. A small change can move you across a gate.
- Report through Self Assessment. If a charge does apply, it is declared on your tax return, and in some cases the scheme can pay it for you.
Common questions
What is the annual allowance for 2026/27?
The standard annual allowance is £60,000. This is the most you can normally pay into pensions each year, across all your contributions and any employer pays in, while still getting tax relief.
When does the tapered annual allowance apply?
The taper only applies if your threshold income is above £200,000 and your adjusted income is above £260,000. If either test is not met, you keep the full £60,000.
How much does the taper reduce my allowance?
For every £2 of adjusted income above £260,000, your allowance drops by £1. It stops falling at £10,000, which is reached once adjusted income hits £360,000.
What is the difference between threshold income and adjusted income?
Threshold income is broadly your taxable income less your own pension contributions. Adjusted income adds back pension contributions, including what your employer pays in. The two-part test stops someone with modest take-home but a large employer contribution from being caught unfairly.
Can I carry forward unused allowance?
Usually yes. If you have not used your full allowance in the previous three tax years and you were a member of a registered pension scheme in those years, you can carry the unused amount forward. This can cover a contribution above this year’s allowance and avoid a charge.
What is the Money Purchase Annual Allowance?
If you have flexibly accessed a defined contribution pension, for example by taking taxable income from it, your allowance for future DC saving is capped at the MPAA of £10,000, and you cannot use carry forward for it.