Pension Carry-Forward & Tapered Annual Allowance UK
Your £60,000 pension allowance can collapse to £10,000 by accident. One careless drawdown move triggers it. Most high earners never spot the trap until the relief is already gone.
Tapered annual allowance for high earners
| Adjusted income | Annual allowance | Reduction | Status |
|---|---|---|---|
| Up to £260,000 | £60,000 | None | Full allowance |
| £280,000 | £50,000 | -£10,000 | Partial taper |
| £300,000 | £40,000 | -£20,000 | Partial taper |
| £320,000 | £30,000 | -£30,000 | Partial taper |
| £340,000 | £20,000 | -£40,000 | Heavy taper |
| £360,000+ | £10,000 | -£50,000 | Fully tapered |
Allowance drops £1 for every £2 of adjusted income above £260,000.
Key takeaways
The standard annual allowance is £60,000 of pension contributions per tax year (employer + personal combined)
You can carry forward unused allowance from the previous three tax years - useful for irregular earners and bonus-driven contributions
Earners with adjusted income above £260,000 face a tapered annual allowance, dropping by £1 for every £2 above the threshold, to a floor of £10,000
Carry-forward and tapering interact - high earners need to model the rules carefully before making large contributions