A Tapered Annual Allowance

Between 6 April 2020 and 5 April 2023, tapering applied if you had both a threshold income over £200,000 and an adjusted income over £240,000. The tapering worked by reducing your AA by £1 for every £2 of your adjusted income over £240,000 (subject to a minimum AA of £4,000 for adjusted incomes of £312,000 or more).

Prior to 6 April 2020, tapering applied if you had both a threshold income over £110,000 and an adjusted income over £150,000. The tapering worked by reducing your AA by £1 for every £2 of your adjusted income over £150,000 (subject to a minimum AA of £10,000 for adjusted incomes of £210,000 or more).

This is your taxable income from all sources less your pension contributions. If you've sacrificed any income by taking salary sacrifice on or after 9 July 2015 then add this sacrificed income back on. If you have Threshold Income of £200,000 or more, then you may wish to consider your Adjusted Income, in case you are subject to a Tapered Annual Allowance.

This is your taxable income, plus the Annual Allowance amount you have used in the tax year, less your pension contributions. If this is £260,000 or more then you may have a Tapered Annual Allowance.

Head over to the HMRC website where you’ll be able to find more information on how to do this.