The pension annual allowance taper, explained
How the £60,000 pension annual allowance shrinks for high earners: adjusted income over £260,000, threshold income over £200,000, the £1-for-£2 taper down to £10,000, with worked examples.
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Most people can put up to £60,000 a year into pensions with tax relief (or 100% of earnings if lower). For high earners the allowance is tapered: above certain income levels it shrinks by £1 for every £2 of extra income, down to a floor of £10,000.
The two income tests
The taper only bites when you fail both tests. Your threshold income (broadly, taxable income minus your own pension contributions) must exceed £200,000, and your adjusted income (broadly, taxable income plus employer pension contributions) must exceed £260,000. Fail only one and you keep the full £60,000, which is why a well-timed personal contribution can sometimes take you back under the threshold-income line entirely.
Worked examples
Adjusted income £300,000 (threshold income above £200,000): you are £40,000 over the £260,000 line, so the allowance falls by £20,000, to £40,000. Adjusted income £360,000 or more: the taper reaches its floor and your allowance is £10,000. Adjusted income £250,000: below the line, full £60,000, regardless of threshold income.
Carry-forward still helps
Unused allowance from the previous three tax years can be carried forward, including years in which you were tapered (you carry forward the unused part of your tapered allowance for those years). And once you flexibly access a pension, the separate £10,000 Money Purchase Annual Allowance applies to money-purchase contributions instead, with no carry-forward at all.
Hundred Summers models the taper, carry-forward and the MPAA inside its projections: contributions above your available allowance simply get no relief in the model, and the Methodology page states every rule it applies.
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