20 December 2021
Pension Tapered Allowance

My understanding is that, when it comes to private pension contributions, the reduced (or tapered) annual allowance for a tax year is dependent on net income, pension savings, threshold income, and adjusted income in that tax year. An adjusted income of over £240,000 would result in a reduced annual allowance in the same tax year. This figure was increased from £150,000. 

However, it should not be reduced if your threshold income is £200,000 (again increased from the previous £110,000) or less for that year. I understand that for a given year, each £2 in adjusted income over the £240,000 limit reduces the annual allowance by £1. The minimum reduced annual allowance was lowered from £10,000 to £4,000. 

I have been reassured by my colleagues in the Treasury that they are aware of the calls to alter the allowance system. Any decision to modify our tax regime is a matter for the Treasury and careful consideration will be given to any proposed amendments to taxation. I understand that the Government keeps all taxes under review. I shall be following the developments on this issue closely, and I will ensure my colleagues at the Treasury are aware of the strength of feeling on this issue. 


In understand that this matter is complicated, but the Government does need to introduce a fair tax system for pensions. It is not sensible to discourage people like consulates from working extra hours which will merely increase the tax in their pensions because they are over the limit.