Answers · UK 2025/26
How does the tapered pension annual allowance work at £360,000 income?
At £360,000 of adjusted income for 2026/27, the tapered pension annual allowance has reached its floor. The £60,000 allowance has been reduced by the maximum £50,000, leaving the minimum £10,000 annual allowance -- and any further income above £360,000 does not reduce it any further.
Full answer
The tapered pension annual allowance reduces the standard £60,000 annual allowance for anyone with adjusted income above the £260,000 threshold for 2026/27, cutting it by £1 for every £2 of adjusted income above that threshold, down to a floor of £10,000. At £360,000 of adjusted income, the amount above the £260,000 threshold is exactly £100,000, and dividing this by 2 gives a reduction of £50,000 -- the maximum possible reduction -- so the annual allowance falls from £60,000 to exactly £10,000, the statutory floor. £360,000 is therefore the precise income level at which the taper stops getting any worse: someone with adjusted income of £400,000 or £1,000,000 has exactly the same £10,000 tapered annual allowance as someone at £360,000, because the reduction cannot go below the £10,000 floor no matter how high adjusted income rises further. This £10,000 minimum is still a real, usable pension annual allowance, and 'carry forward' of unused allowance from the previous three tax years remains available even at the floor, provided the person was a member of a registered pension scheme in those years, which can allow a much larger contribution in a single year than £10,000 alone would suggest. Use the pension calculator to check your own tapered allowance and carry-forward 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.