Glossary · Pensions

Tapered annual allowance (pensions)

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Content updated: 26 May 2026

By the Money Guide editorial team · Editorial responsibility: Kaiser Khan, Editorial Director · How we check facts

Definition: Reduces the £60,000 pension annual allowance for very high earners, by £1 for every £2 of adjusted income over £260,000, down to a £10,000 minimum.

Applies only if both 'threshold income' exceeds £200,000 and 'adjusted income' exceeds £260,000 (definitions in PTM057000). Carry-forward of unused allowance from the previous three tax years can mitigate the impact.

Primary source: gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm057100

More Pensions terms

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Auto-enrolment
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Lump Sum Allowance (LSA)
MPAA (Money Purchase Annual Allowance)
PCLS (Pension Commencement Lump Sum)

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