Tapered Annual Allowance for higher earners
Printer-friendly versionThe annual allowance is reduced or ‘tapered’ for higher earners. The annual allowance will be reduced if your ‘Threshold income’ and ‘Adjusted income’ exceed the limits in a year. For every £2 that your Adjusted Income exceeds the limit, your annual allowance is reduced by £1. Your annual allowance cannot be reduced below the minimum. These limits changed from April 2020 and then again from April 2023.
The table below shows the limits that apply.
Tapered annual allowance limits
|
Term
|
Definition
|
Limit
2016/17 to 2019/20
|
Limit
2020/21 to 2022/23
|
Limit
2023/24 onwards
|
|---|---|---|---|---|
|
Threshold income |
Broadly, your taxable income after your pension contributions have been deducted (including AVCs deducted under the net pay arrangement |
£110,000 |
£200,000 |
£200,000 |
|
Adjusted income |
Broadly, your threshold income plus pension savings built up in the tax year |
£150,000 |
£240,000 |
£260,000 |
|
Minimum annual allowance |
The minimum annual allowance that can apply |
£10,000 |
£4,000 |
£10,000 |
More Information
Examples of calculating the Annual Allowance