HENRY Knowledge · Updated 21 September 2026

What is the tapered pension annual allowance?

Understand the two income tests, a worked taper example and why salary sacrifice alone does not establish your pension allowance.

Mark Graham, founder and product editor · General education, not personal advice. AI-assisted content. Submitted for professional review; feedback remains pending and no approval or endorsement is implied. Tax examples concern 2026/27.

Two tests, not one salary threshold

The standard pension annual allowance for 2026/27 is £60,000. The high-income taper applies when both threshold income exceeds £200,000 and adjusted income exceeds £260,000. These have specific pension-tax definitions; neither should be confused with adjusted net income used for the Personal Allowance. HMRC annual allowance overview.

What the taper does

When both tests apply, the allowance reduces by £1 for every £2 of adjusted income above £260,000, down to £10,000. For example, threshold income of £220,000 and adjusted income of £300,000 produce a £20,000 reduction and a £40,000 allowance, before considering other applicable rules. Employer pension contributions and some salary-sacrifice arrangements affect the tests. Use HMRC’s full taper calculation.

What to collect before changing contributions

• Your expected full-year income, including variable compensation.
• Employer and personal pension contributions across every scheme.
• Pension input statements, particularly for defined-benefit schemes.
• Details of prior flexible pension access and earlier years’ unused allowances.

Unused allowance from the previous three tax years may help, subject to the carry-forward conditions. Flexible access can trigger a separate lower limit. Neither is established simply by entering your salary into a calculator. HMRC limits and carry forward.

Use the planner as a warning, not an approval

The HENRY tool shows modelled pension input so you can spot questions that need resolving. A result below £60,000 is not confirmation that your contributions are within your own allowance. If a large bonus or employer contribution could change the position, ask an appropriately qualified professional to reconcile the full year before treating the model as an action plan.