Tapered Annual Allowance 2026/27: Am I Affected?
Published 11 June 2026 · 8 min read
The short answer: the taper only applies if your threshold income is over £200,000 and your adjusted income is over £260,000. If either test fails, you keep the full £60,000 annual allowance. If both are met, your allowance shrinks by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000. Check your position with our free tapered allowance calculator →
What is the tapered annual allowance?
The standard pension annual allowance for the 2026/27 tax year is £60,000 — the most that can go into your pensions in a year (your contributions, your employer's, and tax relief combined) without triggering a tax charge. For high earners, this allowance is “tapered”: reduced on a sliding scale once income passes certain levels.
The taper catches more people every year, because the thresholds are not index-linked while salaries and bonuses grow. If your total remuneration (including employer pension contributions) is anywhere near £260,000, it's worth running the numbers — getting it wrong means an unexpected Annual Allowance charge on your self assessment.
The two income tests
1. Threshold income — over £200,000?
Broadly your total taxable income (salary, bonus, dividends, rental income, interest) minus your own pension contributions.
If threshold income is £200,000 or below, you are not tapered — no matter how large your employer's pension contributions are.
2. Adjusted income — over £260,000?
Threshold income plus employer pension contributions (and the value of any pension growth in defined benefit schemes).
Only if both tests are met does the taper start cutting your allowance.
One trap to know about: salary sacrifice arrangements set up on or after 8 July 2015 are added back when calculating threshold income, so a new salary sacrifice agreement cannot be used simply to duck under the £200,000 line.
How much allowance do I lose? (2026/27 table)
| Adjusted income | Reduction | Your annual allowance |
|---|---|---|
| £260,000 or below | £0 | £60,000 |
| £280,000 | £10,000 | £50,000 |
| £300,000 | £20,000 | £40,000 |
| £320,000 | £30,000 | £30,000 |
| £340,000 | £40,000 | £20,000 |
| £360,000 or above | £50,000 (maximum) | £10,000 (minimum) |
Assumes threshold income is also above £200,000. The taper bottoms out at £10,000 once adjusted income reaches £360,000.
Worked example
Priya — £185,000 salary plus a £120,000 bonus
- Salary £185,000 + bonus and other income £120,000 = £305,000 total income
- She personally contributes £15,000 to her SIPP; her employer adds £12,000
Threshold income: £305,000 − £15,000 = £290,000 — over £200,000 ✔
Adjusted income: £290,000 + £12,000 = £302,000 — over £260,000 ✔
Excess: £302,000 − £260,000 = £42,000
Reduction: £42,000 ÷ 2 = £21,000
Tapered annual allowance: £60,000 − £21,000 = £39,000
Priya's total contributions are £27,000 — comfortably inside her £39,000 tapered allowance, so no charge. But if she had planned a £40,000 lump sum on top, she would have breached it without realising.
What happens if I exceed my tapered allowance?
Contributions above your tapered allowance trigger an Annual Allowance charge at your marginal income tax rate (typically 45% for those affected by the taper), reported via self assessment. Before paying a charge, check whether carry forward of unused allowance from the previous three tax years can absorb the excess — for many people it wipes the charge out entirely. If a charge over £2,000 remains, your scheme may be able to pay it from your pension via “scheme pays”.
Ways to manage the taper
Use carry forward first
Unused allowance from 2023/24, 2024/25 and 2025/26 can be carried into 2026/27 — often the simplest fix for a one-off breach. Work out your carry forward →
Watch the £200,000 line
Personal pension contributions reduce threshold income. If a contribution brings you to £200,000 or below, the taper switches off entirely — sometimes a modest extra contribution preserves the full £60,000 allowance.
Plan variable pay
Bonuses, vesting share awards and one-off income can push a normally-safe income over the thresholds in a single year. Model the year before contributions are locked in, not after.
Check your own numbers
Our free calculators run these rules for you — no sign-up needed:
This article is for general information only and is not financial or tax advice. Pension and tax rules can change, and their effect depends on your circumstances. Figures relate to the 2026/27 UK tax year. Consider taking regulated financial advice for decisions involving large contributions or the annual allowance charge.