Tapered pension annual allowance (UK, 2025–26)
For 2025–26, the standard pension annual allowance is £60,000. Where the question establishes that the taper applies, the allowance is reduced by £1 for every £2 of adjusted income above £260,000, subject to a minimum tapered allowance of £10,000. Eligible unused allowance carried forward may affect the annual allowance charge. The separate money-purchase anti-avoidance allowance is excluded from the current TX syllabus.
Worked example
In 2025–26, assume the pension annual allowance taper applies and adjusted income is £300,000. The £40,000 excess over £260,000 reduces the £60,000 standard allowance by £20,000, leaving a tapered allowance of £40,000 before considering eligible carry-forward.
Common mistake
Reducing the allowance by the full excess instead of half, or confusing the £10,000 tapered minimum with the separate excluded money-purchase allowance.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |