Glossary · UK
What is Annual Allowance Tapering?
Reduction of the £60,000 pension annual allowance for high earners, down to a £10,000 minimum.
Full Definition
High earners see their £60,000 pension Annual Allowance tapered. From 2023/24, if your «threshold income» exceeds £200,000 AND your «adjusted income» (broadly total taxable income plus employer pension contributions) exceeds £260,000, the allowance is reduced by £1 for every £2 over £260,000, to a minimum of £10,000 at adjusted income of £360,000+. Contributions above your tapered allowance trigger an Annual Allowance Charge at your marginal Income Tax rate. Carry-forward of unused allowance from the previous three tax years can soften the hit. Affects directors, partners, consultants and senior NHS staff most often.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.