Start with all gross taxable income for the 2025/26 tax year — base salary, contractual bonus, RSU/share vesting (treat as employment income), rental profit, dividend income and savings interest above your personal savings allowance.

Do not include ISA returns, premium bond prizes, or anything inside a pension wrapper. The figure you want is everything that would appear on a Self Assessment as taxable.

Enter your personal pension contributions (net or relief-at-source — the calculator grosses up automatically) and your employer's contribution. For salary sacrifice, the sacrificed amount is employer contribution, not yours.

If you're in a DB scheme, enter the calculated pension input amount (not cash) using HMRC's 16× factor on the increase in promised pension.

Threshold income = total taxable income minus your personal pension contributions plus any salary-sacrificed pension on or after 9 July 2015 (anti-forestalling).

If threshold income is £200,000 or below, the taper does not apply at all — you keep the full £60,000 standard allowance regardless of how high your adjusted income is. This is why pension planning is so powerful for earners around £200k–£260k.

Adjusted income = total taxable income plus all pension contributions (yours, employer, salary-sacrificed, DB pension input). The taper reduces your £60,000 allowance by £1 for every £2 over £260,000, with a floor of £10,000.

Example: adjusted income £300,000 → excess £40,000 → reduction £20,000 → tapered allowance £40,000. If excess is £100k+, you hit the £10,000 floor.

Subtract total pension contributions from your tapered allowance. A negative number is your excess — taxed at your marginal rate (40% or 45%). The headroom bar shows whether you're under, at or over your limit.

If you're over, consider: stopping further contributions this year; using carry forward; asking your provider about Scheme Pays to settle the charge from the pension itself.

If you've under-contributed in previous years, carry forward unused allowance from up to three prior tax years (oldest first). Each year's allowance is its own tapered amount — so 2022/23 had a £40k base and £4k floor.

You must have been a member of a UK registered pension scheme in each year you carry forward from. ISAs, EIS and VCTs are alternative tax-advantaged routes once your annual allowance is exhausted.

HMRC closed the obvious loophole of using salary sacrifice purely to dodge the taper. Any salary sacrifice arrangement entered into on or after 9 July 2015 is added back when calculating threshold income — so you cannot pretend a £30k sacrifice never happened.

Pre-9 July 2015 arrangements are protected. If your salary sacrifice has been continuously running since then, you may still benefit from the threshold income reduction. Otherwise, the strategy of salary sacrifice for taper avoidance is largely closed; salary sacrifice still saves NI and reduces adjusted income via the standard route.

Charity payroll giving and gift aid donations do reduce threshold income, providing legitimate planning options for high earners with charitable intentions.

For DB schemes, your pension input amount (PIA) is not what your employer pays in cash — it's the capitalised value of the increase in your promised pension. The HMRC formula is:

PIA = (Closing pension × 16) + closing lump sum − (Opening pension × 16 × CPI uplift) − opening lump sum

A 1/60th accrual scheme on a £150,000 salary adds £2,500 of pension. Multiplied by 16 = £40,000 of pension input — equivalent to a DC contribution of £40k. High earners in DB schemes (NHS consultants, judges, senior civil servants) routinely trip the taper without contributing a penny extra.

Your scheme must issue a "pension savings statement" by 6 October if your PIA exceeded £60,000. Always ask for an early statement for tax planning.

Carry forward uses the oldest unused allowance first. For 2025/26 you can use unused allowance from 2022/23, 2023/24 and 2024/25 (in that order). The amount available in each prior year is that year's tapered allowance, not £60,000.

You must first fully use the current year's allowance before drawing on carry forward. So if your current tapered allowance is £20k, you fund £20k normally and then add carry forward on top.

Strategic timing: a final-year carry forward use can be huge — up to £160k+ in a single tax year if you have unused allowance across all four years. Common before a big bonus, redundancy payment, or business sale.

If you've flexibly accessed any DC pension (e.g. taken UFPLS or income drawdown above the 25% tax-free amount), you trigger the MPAA — currently £10,000 — for all future DC contributions. The MPAA replaces the standard £60k for DC, and you cannot carry forward into MPAA.

The taper still applies to your DB pension input, calculated against the residual £50k allowance (£60k − £10k MPAA). This creates a complex split where DC is capped at £10k and DB at the tapered residual.

Avoid triggering the MPAA accidentally. Taking only the 25% tax-free cash via flexi-access drawdown does NOT trigger MPAA — only taking taxable income does.

If your annual allowance charge exceeds £2,000 and your pension input in that scheme exceeds £60,000, you can require your scheme to pay the charge directly to HMRC under Mandatory Scheme Pays. Your benefits are reduced accordingly.

Voluntary Scheme Pays is offered by most providers below the £2k threshold and is useful if you don't have liquid cash to settle the bill. The deadline for electing Scheme Pays is 31 July following the Self Assessment year — so for 2025/26, by 31 July 2027.

Trade-off: Scheme Pays settles tax now but reduces your retirement pot. Cash settlement preserves the pot but needs liquidity. Run the numbers on both — usually paying from cash wins long-term if you can afford it.