NHS Pension
Tapered Annual Allowance: Worked Examples
Independent guidance — not affiliated with NHS England or DHSC
Our main Annual Allowance Tax Charge Explained guide covers the tapered allowance at a summary level, with one worked example. This page goes further: three scenarios straddling the £200,000 and £260,000 thresholds, computed using this site's own real taper function, showing exactly how different income combinations produce very different outcomes — including one genuinely counter-intuitive case where a high income produces no taper at all.
Short answer
Tapering only applies once both a threshold-income test (£200,000) and an adjusted-income test (£260,000) are exceeded. Where both are met, the standard £60,000 allowance reduces by £1 for every £2 of adjusted income above £260,000, down to a floor of £10,000. Miss either test — even with a very high income on the other measure — and the full £60,000 allowance still applies. The three scenarios below show a no-taper-despite-high-income case, a moderate taper, and the floor being reached.
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The two-test mechanic
Test 1: threshold income
Broadly your taxable income before pension contributions. Under £200,000, tapering doesn't apply at all — regardless of adjusted income.
Test 2: adjusted income
Broadly threshold income plus your pension growth (Pension Input Amount) added back. Only relevant once Test 1 is already failed (i.e. exceeded).
Both conditions have to be true at once for tapering to apply. This is precisely what makes Scenario A below possible. Our tapered annual allowance calculator applies both tests automatically to your own threshold and adjusted income.
Scenario A: high income, but no taper at all
A consultant with a large personal pension contribution reducing her taxable income has a threshold income of £190,000 — under the £200,000 threshold — but, once a strong year of CARE pension growth is added back, an adjusted income of £275,000, comfortably over £260,000.
| Test | Figure | Result |
|---|---|---|
| Threshold income | £190,000 | Under £200,000 — Test 1 not met |
| Adjusted income | £275,000 | Over £260,000, but irrelevant since Test 1 already fails |
| Applicable Annual Allowance | £60,000 — the full standard allowance, no taper | |
With a Pension Input Amount of £42,000 for the year — itself under the full £60,000 allowance — she has no chargeable amount at all, despite an adjusted income of £275,000 that would, on its own, suggest a heavily tapered position.
Scenario B: over both thresholds, moderate taper
A consultant with threshold income of £210,000 and adjusted income of £270,000 — over both tests this time.
| Step | Calculation | Result |
|---|---|---|
| Excess over £260,000 | £270,000 − £260,000 | £10,000 |
| Reduction (£1 per £2 of excess) | £10,000 ÷ 2 | £5,000 |
| Applicable Annual Allowance | £60,000 − £5,000 | £55,000 |
Her Pension Input Amount for the year is £58,000 — now over her own tapered allowance of £55,000, an excess of £3,000. At her higher-rate (40%) marginal tax rate, before any carry-forward, that's an estimated charge of £1,200.
Scenario C: the taper floor
A very senior consultant with substantial private practice income alongside his NHS role has a threshold income of £300,000 and adjusted income of £400,000 — well over both thresholds.
| Step | Calculation | Result |
|---|---|---|
| Excess over £260,000 | £400,000 − £260,000 | £140,000 |
| Reduction (£1 per £2 of excess) | £140,000 ÷ 2 | £70,000 (exceeds the standard allowance itself) |
| Applicable Annual Allowance | Floored at the minimum | £10,000 |
His applicable Annual Allowance
£10,000
The reduction implied by his income (£70,000) is larger than the standard allowance itself, so the allowance simply floors at £10,000 — it can't go lower or turn negative.
With a Pension Input Amount of £68,000 against an allowance of just £10,000, his excess is £58,000. At his additional-rate (45%) marginal tax rate, before any carry-forward, that's an estimated charge of £26,100 — a genuinely significant figure, and exactly the kind of position where Scheme Pays and carry-forward both deserve serious consideration.
Check your own tapered allowance
Use our Annual Allowance Calculator to run your own threshold and adjusted income through this exact taper calculation.
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What the three scenarios show together
- ✓ Scenario A: threshold income £190,000 (under the £200,000 threshold) meant NO taper at all, despite adjusted income of £275,000 — allowance stayed at the full £60,000
- ✓ Scenario B: both thresholds exceeded produced a moderate taper down to £55,000, with a £3,000 excess and an estimated £1,200 charge
- ✓ Scenario C: a very high income hit the £10,000 floor exactly, with a much larger £58,000 excess and an estimated £26,100 charge
- ✓ Both income tests matter independently — checking only adjusted income, or only threshold income, can give a completely wrong impression of your actual tapered position
⚠Every figure above is before carry-forward
Carry-forward from the previous three tax years can reduce or fully absorb the excess shown in Scenarios B and C — and, notably, using carry-forward from a year in which you were also tapered means that year's own (lower) allowance needs to be used, not the standard £60,000 figure. See our Carry Forward: Worked Examples guide for exactly how that works.
Why trust this guide
- ✓ Every allowance and charge figure on this page is computed at build time from this site's own real taperedAnnualAllowance() and estimateAnnualAllowanceCharge() functions, not hand-typed numbers
- ✓ Deliberately includes a no-taper-despite-high-income scenario, since checking only one of the two income tests is a genuinely common, costly mistake
- ✓ Uses the real 2026/27 figures: £60,000 standard allowance, £200,000/£260,000 taper thresholds, £10,000 floor
- ✓ Clearly labels every excess figure as pre-carry-forward, rather than implying a breach automatically means a tax bill
- ✓ Independent and not affiliated with NHS England, NHS Pensions/NHSBSA, HMRC or the DHSC — this is educational context, not financial or tax advice
Annual Allowance Tax Charge Explained
The summary-level tapering mechanics this page expands into full worked examples.
Pension Input Amount (PIA) Explained With Worked Examples
How the Pension Input Amount itself, tested against the allowance here, is calculated.
Carry Forward: Worked Examples
How unused allowance from previous years can reduce the excess shown here.
NHS Pension Scheme Pays Explained
How to handle a charge like the one in Scenario C.
Annual Allowance Calculator
Run your own income figures through this exact taper calculation.
This guide is independent, general information only — not financial or tax advice — and FrontlinePay is not affiliated with NHS England, NHS Pensions/NHSBSA, HMRC or the Department of Health and Social Care. The worked examples use illustrative income and pension figures — they are not a calculation of your own position. Taper thresholds and rates can change over time. Confirm your own current figures with the Annual Allowance Calculator or a specialist adviser.
Frequently asked questions
What are the actual taper thresholds and floor for 2026/27? +
Why does Scenario A below have no taper at all, despite a high adjusted income? +
What's the actual difference between threshold income and adjusted income? +
Once the taper floor is reached, does a higher income reduce the allowance any further? +
Is the excess shown in these scenarios definitely a tax bill? +
Can my tapered allowance change from one tax year to the next? +
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