Answers · UK 2025/26
Does the tapered pension annual allowance apply at £260,000 income?
At exactly £260,000 of adjusted income for 2026/27, you are precisely at the taper threshold. The tapered pension annual allowance reduction only applies to income above £260,000, so at exactly this figure the reduction is £0 and you still have the full £60,000 annual allowance.
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The tapered pension annual allowance reduces the standard £60,000 annual allowance for anyone with 'adjusted income' above £260,000 for 2026/27, cutting it by £1 for every £2 of adjusted income above that threshold, down to a floor of £10,000. At exactly £260,000 of adjusted income, you sit precisely at the threshold itself, meaning there is £0 of income above the trigger point, so the taper reduction is £0 and your annual allowance remains the full, untapered £60,000. Earn even £1 more, and the taper begins to bite: £1 above the threshold triggers a 50p reduction in the allowance, continuing at that rate until the floor of £10,000 is reached at £360,000 of adjusted income. 'Adjusted income' is a specific measure that includes salary, bonus, dividends, rental income, and other taxable income, plus your own and your employer's pension contributions added back in -- so someone with a large employer pension contribution can be pushed just over £260,000 by that contribution alone, even with a more modest headline salary. Anyone hovering close to this threshold, for example through a bonus or overtime late in the tax year, should check their adjusted income carefully, since crossing £260,000 can retrospectively affect how much pension contribution can be made with full tax relief for that year. Use the pension calculator to check your own adjusted income and tapered allowance position.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.