← Calculators/Tax year 2026/27·Last reviewed
Tapered annual allowance calculator
The two income tests and the £1-for-£2 reduction, against the right year's thresholds — they've moved twice.
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— In short
The tapered annual allowance reduces a high earner's pension annual allowance by £1 for every £2 of adjusted income above the taper threshold, down to a floor. It applies only when both income tests are failed — threshold income above its gate and adjusted income above the taper line — so clearing either test leaves the standard allowance standing.
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Tapered Annual Allowance
Tax year 2026/27 · Last reviewed 20 Jul 2026
Two income tests, one year.
Net income LESS the gross of the member's relief-at-source contributions (net-pay and salary-sacrifice ones are already out of net income — don't deduct twice), PLUS any pay given up under a salary sacrifice made on or after 9 July 2015. At or below the gate → no taper, whatever the adjusted income.
Net income PLUS all pension input including employer contributions.
The thresholds and the floor have both moved. 2020/21 lifted both income tests by £90k; 2023/24 raised the adjusted-income line again (£240k → £260k), the standard allowance to £60k, and the floor from £4k back to £10k. The threshold-income gate has stayed at £200k since 2020/21.
Unsure how to build the two income figures from salary, bonus and employer contributions? Open the full pension workbench (free account) to derive them field by field.
For planning and illustration purposes only. Verify all inputs against source documents. This tool does not constitute financial or tax advice.
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— How it's calculated
Two tests, both must bite
The taper only applies when BOTH income tests are failed: threshold income above its gate, AND adjusted income (net income plus all pension input, including employer contributions) above the taper line. Clear either test and the standard allowance stands. Threshold income is net income less the gross amount of the member's relief-at-source contributions — net-pay and salary-sacrifice contributions are already outside net income, so deducting them again double-counts; and any employment income given up under a salary-sacrifice arrangement made on or after 9 July 2015 is added back, which is why sacrifice needs the anti-avoidance check rather than a quick glance.
The reduction and the floor
Above both lines, the allowance reduces by £1 for every £2 of adjusted income over the adjusted-income threshold, down to a floor; the statutory reduction is rounded down to a whole pound. Both the thresholds and the floor are year-specific, and they have moved twice. 2020/21 lifted both income tests by £90,000 (threshold income £110,000 → £200,000, adjusted income £150,000 → £240,000) while cutting the floor to £4,000. 2023/24 then raised the standard allowance to £60,000, lifted the adjusted-income line again to £260,000, and restored the £10,000 floor — the threshold-income gate stayed at £200,000 throughout. Carrying the £240,000 line into a 2023/24-or-later case over-tapers by £10,000 of allowance; every figure here reads from the selected year's versioned config.
PTM057100 (rates and thresholds by year) · FA 2004 s.228ZA(2)
Tapered years still carry forward
A tapered year generates carry-forward from its TAPERED allowance — a member tapered to the floor who made no contributions carries the floor amount forward, not the standard allowance. Prior-year taper is the most common source of overstated carry-forward.
PTM055100 (carry forward from tapered years)
— How to calculate the tapered annual allowance
Step 1
Work out threshold income
Take net income, deduct the gross amount of the member’s relief-at-source contributions (net-pay and salary-sacrifice contributions are already outside net income — do not deduct them twice), and add back employment income given up under a salary-sacrifice arrangement made on or after 9 July 2015. If threshold income is at or below its gate, no taper applies whatever the adjusted income.
Step 2
Work out adjusted income
Take net income and add all pension input for the year, including employer contributions.
Step 3
Check both gates
The taper applies only if threshold income is above its gate AND adjusted income is above the taper line. Clear either test and the standard allowance stands.
Step 4
Apply the £1-for-£2 reduction
Reduce the standard annual allowance by £1 for every £2 of adjusted income above the taper threshold for that tax year.
Step 5
Apply the floor
The tapered allowance cannot fall below the year’s floor — £10,000 since 2023/24 (it was £4,000 before).
— Worked example
- Standard annual allowance
- £60,000
- Tapered allowance (£1 off per £2 over the line)
- £40,000
- Applied allowance (floored)
- £40,000
Computed live by the same engine the tool above runs. At £300,000 of adjusted income the £1-for-£2 reduction takes £20,000 off the standard £60,000, leaving £40,000. The floor — £10,000 since 2023/24 (£4,000 before; the year selector matters) — would only bind from £360,000 of adjusted income.
— Frequently asked questions
What is the tapered annual allowance?
It reduces the pension annual allowance for high earners by £1 for every £2 of adjusted income above the taper threshold, down to a floor. It is the mechanism that limits tax-relieved pension saving for the highest earners.
When does the tapered annual allowance apply?
Only when both income tests are failed: threshold income above its gate AND adjusted income above the taper line. If either test is cleared — including through salary-sacrifice arrangements subject to the anti-avoidance rules — the standard allowance stands.
What is the difference between threshold income and adjusted income?
Threshold income is net income less the gross amount of the member’s relief-at-source pension contributions, with any employment income given up under a salary-sacrifice arrangement made on or after 9 July 2015 added back. Net-pay and salary-sacrifice contributions are already outside net income, so they are not deducted again. Adjusted income is net income plus all pension input for the year, including employer contributions. Threshold income is the gate; adjusted income drives the size of the reduction.
What is the tapered annual allowance floor?
The lowest the tapered allowance can fall to. It is £10,000 for 2023/24 onwards, having been cut to £4,000 for 2020/21 to 2022/23. The income tests moved with it: 2020/21 lifted threshold income to £200,000 and adjusted income to £240,000, and 2023/24 lifted adjusted income again to £260,000 while the threshold-income gate stayed at £200,000. The thresholds and the floor are year-specific, so the right year’s figures must be used.
Do tapered years still generate carry-forward?
Yes — but from the tapered allowance, not the standard one. A member tapered to the floor who made no contributions carries forward only the floor amount. Using the standard figure for a tapered prior year is the classic carry-forward overstatement.
— Related
- Pension annual allowance: the complete guide
- The taper in depth — adjusted vs threshold income, with the worked example
- Taper and carry forward together: the order of operations
- Annual allowance calculator — taper, MPAA and carry-forward together
- Carry forward calculator — including tapered prior years
- How every figure is verified against the HMRC corpus
— When you're ready
Put this calculation in the client file.
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