Answers · UK 2025/26
How does the tapered pension annual allowance work on £400,000 income?
On adjusted income of £400,000 in 2026/27, the pension annual allowance is fully tapered down to the £10,000 floor, since income exceeds the £360,000 point at which the maximum £50,000 reduction applies. The tapered allowance stays at £10,000 for any income above £360,000.
Full answer
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 (a £100,000 excess, halved to a £50,000 reduction from £60,000). Since £400,000 is above £360,000, the annual allowance is fully tapered to the floor of £10,000 -- it cannot fall any further, no matter how much higher income goes. This £10,000 is the maximum that can be paid into pensions across all schemes in the tax year while still receiving full tax relief; contributions above this trigger an annual allowance tax charge, clawing back relief at the individual's marginal rate, typically 45% for additional-rate taxpayers at this income level. "Adjusted income" includes salary, bonus, dividends, rental income and other taxable income, plus pension contributions added back in. At this level, carry forward of unused allowance from the previous three tax years is often the only practical way to make larger pension contributions without a tax charge, provided the person was a member of a registered pension scheme in those earlier years and had allowance to spare. Use the pension calculator to check your carry-forward position precisely.
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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.