Glossary · UK
What is Pension Annual Allowance Taper?
A reduction to the pension annual allowance for very high earners.
Full Definition
The pension annual allowance taper reduces the standard annual allowance for pension tax relief for individuals whose income exceeds set threshold and adjusted income limits. For every £2 of adjusted income above the threshold, the allowance is reduced by £1, down to a minimum tapered allowance. Anyone caught by the taper who exceeds their reduced allowance faces an annual allowance charge, effectively clawing back the tax relief on the excess contribution.
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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.