Answers · UK 2025/26
How does the tapered pension annual allowance work on £280,000 income?
On adjusted income of £280,000 in 2026/27, the £60,000 pension annual allowance is reduced by £1 for every £2 above the £260,000 taper threshold. £20,000 above the threshold means a £10,000 reduction, giving a tapered annual allowance of £50,000.
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High earners face a tapered pension annual allowance, which reduces the standard £60,000 annual allowance for anyone with "adjusted income" above £260,000 for 2026/27. The taper reduces the allowance by £1 for every £2 of adjusted income above the £260,000 threshold, down to a minimum floor of £10,000, which is reached once adjusted income hits £360,000. On adjusted income of £280,000, the amount above the £260,000 threshold is £20,000. Dividing this by 2 gives a reduction of £10,000, so the annual allowance is reduced from £60,000 to £50,000. This tapered £50,000 is the maximum that can be paid into pensions (across all schemes, combining personal and employer contributions) in the tax year while still receiving full tax relief, without triggering an annual allowance tax charge on the excess. "Adjusted income" for this purpose includes salary, bonus, dividends, rental income and other taxable income, plus your own and your employer's pension contributions added back in -- it is a wider measure than simple salary, so someone with a large employer pension contribution can be caught by the taper even with a more modest headline salary. High earners affected by the taper often use "carry forward," which allows unused annual allowance from the previous three tax years to be added to the current year's tapered allowance, provided they were a member of a registered pension scheme in those earlier years.
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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.