Answers · UK 2025/26
How does the tapered pension annual allowance work on £350,000 income?
On adjusted income of £350,000 in 2026/27, the £60,000 pension annual allowance is reduced by £1 for every £2 above the £260,000 taper threshold. £90,000 above the threshold means a £45,000 reduction, giving a tapered annual allowance of £15,000.
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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, reached once adjusted income hits £360,000. On adjusted income of £350,000, the amount above the £260,000 threshold is £90,000. Dividing this by 2 gives a reduction of £45,000, so the annual allowance is reduced from £60,000 to just £15,000 -- close to the £10,000 floor, since income is only £10,000 below the point at which the taper is fully exhausted. This tapered £15,000 is the maximum that can be paid into pensions across all schemes in the tax year while still receiving full tax relief; any contributions above this trigger an annual allowance tax charge that effectively removes the tax relief on the excess. "Adjusted income" includes salary, bonus, dividends, rental income and other taxable income, plus pension contributions added back in, meaning even a modest employer pension contribution can push someone from a slightly lower salary into this heavily tapered position. Carry forward of unused allowance from the previous three tax years can help absorb a larger one-off contribution, such as a bonus year, without triggering the charge. Use the pension calculator to check your own tapered allowance.
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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.