Tapered annual allowance
A reduced annual allowance for high earners — the £60,000 limit drops by £1 for every £2 of adjusted income above £260,000, to a floor of £10,000.
The taper only applies when BOTH conditions are met: threshold income above £200,000 AND adjusted income above £260,000. Threshold income is broadly your income minus personal pension contributions. Adjusted income is threshold income plus employer pension contributions.
The floor of £10,000 is reached at £360,000 adjusted income. The taper is designed to limit tax relief for the highest earners, but it creates complexity — especially for people with volatile income (bonuses, share vestings) who may not know their adjusted income until the tax year ends.
Estimates use 2026/27 tax rates. Scottish taxpayers are subject to different income tax rates and bands. The calculations assume your salary is your only source of income and do not account for benefits in kind or other taxable income.