Tapered Annual Allowance for higher earners

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From the tax year 2016/17 the annual allowance (AA) is tapered for members who have a ‘Threshold Income’ in excess of £110,000, and ‘Adjusted Income’ in excess of £150,000.
 
For every £2 that your Adjusted Income exceeds £150,000, your AA is reduced by £1 (to a minimum of £10,000).
 
Threshold income includes all sources of income that are taxable e.g. property income, savings income, dividend income, pension income, social security income (where taxable), state pension income etc.
 
Please Note:
You are not allowed to deduct from taxable income any amount of employment income given up for pension provision as a result of any salary sacrifice made on or after 9 July 2015.
 

How does the taper work?

From 6 April 2016, the taper reduces the AA by £1 for £2 of adjusted income received over £150,000, until a minimum AA of £10,000 is reached.  This means that from 6 April 2016 the AA for high earners is as follows:
 

Annual Allowance for High Earners

 
Adjusted Income Annual Allowance
£150,000 or below £40,000
£160,000 £35,000
£170,000 £30,000
£180,000 £25,000
£190,000 £20,000
£200,000 £15,000
£210,000 or above £10,000