UK Pension Annual Allowance Taper Calculator 2026/27
Calculate your 2026/27 UK pension annual allowance after tapering. Standard £60,000 allowance, tapered when adjusted income >£260K (min £10K). NHS pension scenarios and carry-forward analysis.
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Salary, bonus, dividends, rental, savings income £
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Your personal contributions (gross, before tax relief) Total income:
£60,000
Tapered Annual Allowance
£0
Total Pension Input
£0
Excess (if any)
£0
AA Tax Charge
Annual Allowance Taper Calculation (2026/27)
UK Pension Annual Allowance Taper 2026/27 — Full Guide
The pension annual allowance taper was introduced to limit pension tax relief for high earners. Since 2023/24, the thresholds have been at their current levels: £200,000 threshold income and £260,000 adjusted income, with a minimum tapered AA of £10,000. The standard AA of £60,000 is well above the old £40,000 limit.
Taper Calculation Formula
Threshold Income = Total Income − Personal Pension Contributions
If Threshold Income ≤ £200,000: Standard AA = £60,000 (NO taper)
If Threshold Income > £200,000:
Adjusted Income = Threshold Income + Employer Pension Contributions
If Adjusted Income ≤ £260,000: Standard AA = £60,000 (NO taper)
If Adjusted Income > £260,000:
Tapered AA = £60,000 − (Adjusted Income − £260,000) ÷ 2
Minimum Tapered AA = £10,000
AA Charge = max(0, Total Pension Input − Tapered AA) × Marginal Tax Rate
If Threshold Income ≤ £200,000: Standard AA = £60,000 (NO taper)
If Threshold Income > £200,000:
Adjusted Income = Threshold Income + Employer Pension Contributions
If Adjusted Income ≤ £260,000: Standard AA = £60,000 (NO taper)
If Adjusted Income > £260,000:
Tapered AA = £60,000 − (Adjusted Income − £260,000) ÷ 2
Minimum Tapered AA = £10,000
AA Charge = max(0, Total Pension Input − Tapered AA) × Marginal Tax Rate
Example — £220K income, £30K employer + £10K employee pension
Threshold income: £220,000 − £10,000 = £210,000 (>£200K, so check adjusted)
Adjusted income: £210,000 + £30,000 = £240,000 (≤£260K, so NO taper)
Annual allowance: £60,000
Total pension input: £30,000 + £10,000 = £40,000
Excess: £0 | AA charge: £0
Adjusted income: £210,000 + £30,000 = £240,000 (≤£260K, so NO taper)
Annual allowance: £60,000
Total pension input: £30,000 + £10,000 = £40,000
Excess: £0 | AA charge: £0
Extended
NHS Pension Scenarios + Carry Forward & Contribution Strategies
Special NHS pension scenarios plus how to use carry forward unused allowance and optimal contributions to stay below threshold income
NHS pension annual allowance scenarios are complex due to defined benefit calculation rules. Below are example scenarios, plus a carry-forward calculator and strategies to reduce threshold income.
Carry Forward Calculator (3 Prior Years)
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NHS Pension Scenarios — Illustrative Annual Allowance Charges
| NHS Role | Approx. Salary | Pension Input (est.) | Adjusted Income | Tapered AA | Approx. AA Charge |
|---|---|---|---|---|---|
| FY2/SHO | £35,000 | £4,500 | ~£45,000 | £60,000 | £0 |
| Registrar | £55,000 | £7,500 | ~£68,000 | £60,000 | £0 |
| Consultant (early career) | £110,000 | £25,000 | ~£140,000 | £60,000 | £0 |
| Consultant (late career) | £160,000 | £60,000 | ~£225,000 | £60,000 | £0 (under AA) |
| Consultant + bonus | £220,000 | £70,000 | ~£295,000 | £42,500 | ~£12,250 at 45% |
| Medical Director | £280,000 | £80,000 | ~£370,000 | £15,000 | ~£29,250 at 45% |
Strategies to Stay Below £200K Threshold Income
| Strategy | Max Saving | Notes |
|---|---|---|
| Salary sacrifice pension (reduces threshold income) | Variable | Also reduces NI contributions for both employee and employer |
| Gift Aid charitable donations | Variable | Extends basic rate band; reduces net income for threshold purposes |
| Venture Capital Trust (VCT) subscription | 30% credit on up to £200K | VCT income is tax-free but does not reduce threshold income directly |
| Enterprise Investment Scheme (EIS) | 30% credit on up to £1M | SEIS 50% credit on up to £200K. EIS does not reduce threshold income |
| Defer bonus to next tax year | Threshold income drop | Requires employer cooperation; only available for some employees |
Frequently Asked Questions
What is the UK pension annual allowance for 2026/27?
The standard annual allowance (AA) for 2026/27 is £60,000. This is the maximum you can contribute to all pension schemes in a tax year while receiving tax relief. The allowance covers all contributions — both employer and employee — to defined contribution schemes, plus the notional input to defined benefit schemes. Exceeding the annual allowance results in an annual allowance charge (tax) at your marginal income tax rate on the excess.
How does the pension annual allowance taper work?
The taper applies when both your "threshold income" exceeds £200,000 AND your "adjusted income" exceeds £260,000. When these conditions are met, the annual allowance is reduced by £1 for every £2 of adjusted income above £260,000. The minimum tapered allowance is £10,000 (reached when adjusted income is £360,000). Threshold income = net income minus personal contributions. Adjusted income = threshold income plus employer pension contributions.
What is the difference between threshold income and adjusted income?
These are two distinct tests both of which must be exceeded for the taper to apply. Threshold income is your total income minus any personal (employee) pension contributions — if this is ≤£200,000, the taper does NOT apply regardless of adjusted income. Adjusted income adds back employer pension contributions to threshold income. If threshold income is £220,000 and you have £50,000 employer contributions, adjusted income is £270,000, and the taper applies (reducing AA by £5,000 to £55,000).
What is the NHS pension annual allowance issue?
NHS pension (defined benefit) annual allowance calculations are notoriously complex. The "pension input amount" for the NHS scheme is calculated as: 16 × (closing pension − opening pension) + lump sum change. For consultants and senior doctors, NHS pay rises, progression, and the career average revaluation can create large "notional" pension inputs that exceed the annual allowance even without any additional contributions. Many NHS staff face unexpected tax charges of tens of thousands of pounds.
Can I carry forward unused annual allowance to avoid an AA charge?
Yes. Carry forward allows you to use unused annual allowance from the previous 3 tax years, provided you were a member of a registered pension scheme in those years. For 2026/27, you can carry forward from 2023/24, 2024/25, and 2025/26 — when the AA was £60,000 each year. Maximum carry forward is 3 × £60,000 = £180,000. Total available = £60,000 (current) + up to £180,000 carried forward = £240,000. This is especially useful for large one-off contributions.