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Tapered annual allowance calculator
Check whether income reduces the annual allowance.
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Tapered Annual Allowance
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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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The two income tests and the £1-for-£2 reduction, against the right year's thresholds — they've moved twice.
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— Understanding the result
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.
— 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 above the taper line. Both start from net income before personal allowances. Threshold income deducts gross relief-at-source contributions and adds relevant sacrificed or flexible pay under arrangements made after 8 July 2015; net-pay contributions have already reduced net income and are not deducted twice. Adjusted income restores specified contribution relief and adds pension input less member contributions, without adding relief-at-source contributions again. Both measures deduct relevant taxable lump-sum death benefits. Clear either income test and the taper does not reduce the ordinary allowance.
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 a frequent 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. Add back any net-pay contributions and any contributions for which relief was claimed. Then add the year’s total pension input less the member’s own contributions — which leaves employer contributions in. Relief-at-source contributions are not added back.
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
- £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 met: threshold income above its gate AND adjusted income above the taper line. Relevant sacrificed or flexible pay under arrangements made after 8 July 2015 is added back to threshold income. If either income test is not met, the taper does not reduce the ordinary allowance.
What is the difference between threshold income and adjusted income?
Both start from net income before personal allowances. Threshold income deducts gross relief-at-source contributions and adds relevant sacrificed or flexible pay; adjusted income restores specified contribution relief and adds pension input less member contributions. Net-pay contributions must not be deducted twice, and relief-at-source contributions are not added again to adjusted income. Both measures deduct relevant taxable lump-sum death benefits.
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 a common carry-forward overstatement.
— Related
- Annual allowance: the complete guide
- How to build threshold and adjusted income — relief methods and source adjustments
- 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: the three prior years, with a prior year’s taper where you enter its income
- See calculation methods and regression evidence