Tapered annual allowance
On 6 April 2016 the government introduced the tapered annual allowance for individuals with adjusted income of over £150,000. However from 6 April 2020 adjusted income was raised to £240,000, from 6 April 2023 this was raised again to £260,000.
The contribution amount to a pension each year and the tax relief received is limited to the annual allowance. For most people this is usually £60,000 (£40,000 for years prior to 2022/23) but for some high earners this may be reduced. The allowance will be ‘tapered’ according to income, although everyone will retain an allowance of at least £10,000. This means the amount which could be tax-efficiently invested into pensions each year, could change from tax year to tax year.
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The content contained on this page is designed to give professional financial advisers technical information on retirement planning and pensions legislation and should not be relied upon.
This article represents a summary of our understanding of the law at the date of its last review (March 2022). Tax limits, benefits, allowances and rules are often subject to change and may change in future. Advisers and individuals should check that tax limits, allowances and rules have not changed. The value of benefits depends on individual circumstances. The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. Different options may have different effects for tax purposes, different implications for pension provision and different impacts on other assets and financial planning.