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 gross relief at source 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 should calculate your Adjusted Income, in case you are subject to a Tapered Annual Allowance.

Your taxable income is comprised of salary, bonuses, pension income (including state pension), interest on savings, dividends or rental income. We recommend that you seek independent advice if you are in any doubt what to include.

You can use our Contributions and Tax calculator in My USS to estimate your threshold income.

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.

You can use our Contributions and Tax calculator in My USS to estimated your adjusted income.

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