Tapered Annual Allowance Calculator United Kingdom

What the tapered annual allowance means for high earners

The tapered annual allowance reduces how much you can pay into a pension each year once your income is high enough. A bonus, a share award vesting, a period of overtime or a good year of rental profit can push you over the limits, and the first sign is often a scheme pays statement long after the tax year has ended.

Enter your pay, your own pension contributions and your employer’s contributions, and the calculator works out both income measures HMRC tests, shows how much allowance the taper removes, and estimates the charge on anything paid in above the allowance you have left.

How the tapered annual allowance works

There are two income tests, and you lose allowance only if you fail both. The first is threshold income: broadly your total taxable income for the year, after contributions taken from your pay under a net pay arrangement, less the gross value of any personal contributions paid from taxed income, and with any salary sacrifice set up after 8 July 2015 added back. If threshold income is £200,000 or less, you keep the full annual allowance however much is paid into your pension.

The second test is adjusted income. It starts from the same net income but adds back every pension contribution made for you during the year: your own net pay contributions and everything your employer paid in. Without this, someone could reduce their taxable income with a very large employer contribution and escape a rule aimed at people receiving very large employer contributions.

When both tests are failed, the allowance falls by £1 for every £2 of adjusted income above £260,000. It stops at the £10,000 floor, reached at adjusted income of £360,000, beyond which extra income costs no more allowance. The calculator reports that point.

Why threshold income is the figure worth managing

Adjusted income is hard to move, because almost anything that reduces your taxable income is added straight back. Threshold income is different: a larger net pay deduction reduces it, and so does a personal contribution paid from taxed income.

That is why the calculator shows the extra contribution that would clear the taper. If threshold income comes back to £200,000 or below, the first test passes and the full allowance is restored however high adjusted income is. It works as an on-off switch, not a sliding scale, which makes it one of the few decisive levers in pension planning for higher earners.

The two figures move apart when your employer pays more in. A larger employer contribution leaves threshold income unchanged while adding to adjusted income pound for pound, so a rise in employer funding can reduce the allowance that funding is meant to use.

A worked example

Take £260,000 of employment income, £15,000 of your own contributions through net pay and £35,000 from your employer. Threshold income is £245,000 and adjusted income £295,000, so both tests are failed. Adjusted income is £35,000 over the limit, which removes £17,500 of allowance and leaves £42,500. Total pension input is £50,000, so £7,500 is over the allowance, and at 45% the charge is £3,375. An extra £45,000 of your own contributions would bring threshold income down to £200,000 and restore the full allowance.

Pension input, excess and the charge

Your pension input amount is the total that counts against the allowance. For a defined contribution scheme it is everything paid in: your contributions, your employer’s and any personal contributions grossed up for basic rate relief. For a defined benefit scheme it is the growth in your promised pension over the year, calculated by a statutory formula, which can be much larger than the contributions on your payslip.

If the total exceeds the allowance available, the excess is added to your taxable income and taxed at your marginal rate; choose your band so the estimate uses the right rate. Where the charge is large enough and the scheme rules allow, scheme pays lets the pension settle the bill in exchange for a permanent reduction in your benefits.

Carry forward can help. Unused allowance from the previous three tax years can be added to this year’s, and the calculator shows how much your contributions use. Carry forward from a year in which you were already tapered is limited to that year’s tapered figure, so a run of high-income years leaves less headroom than people expect.

Reading the results

The main figure is the allowance left after the taper. Threshold income and adjusted income are shown separately, so you can see which test caused the reduction or which one protected you. Allowance available adds any carry forward, and headroom shows what you could still pay in before a charge arises.

If the result looks uncomfortable, the timing of contributions is the main lever: moving a discretionary contribution into a lower-income year can change the answer materially.

Defined benefit members should use the pension input amount from their annual pension savings statement rather than a contribution rate, because the two rarely match.

These results are an estimate based on the figures you enter and the current published limits. They are not personal financial or tax advice, and a pension scheme statement or an adviser should confirm your position before you act.

About This Tool: Tapered Annual Allowance

Tapered annual allowance: use this tool to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.