The Annual Allowance (AA) is the amount of pension savings that benefits from tax relief in any one tax year.
Since April 2016 the Annual Allowance has been ‘tapered’ for individuals with ‘adjusted’ income of more than a certain level. In 2024/25 & 2023/24 the amount is £260,000 whereas in previous tax years (in 2022/23, 2021/22, & 2020/21) the amount was £240,000 and before that it was £150,000. The reduction in Annual Allowance will be £1 for every £2 that the ‘adjusted’ income exceeds this amount, although individuals will still have an Annual Allowance of at least £10,000 in 2024/25 & 2023/24, £4,000 in 2022/23, 2021/22 and 2020/21, or £10,000 in previous tax years.
If a client ‘flexibly accesses’ their benefits and take an income, then the Money Purchase Annual Allowance (MPAA) will be triggered.
Annual Allowance history since 2006/07 and Money Purchase Annual Allowance is below;
| TAX YEAR | AA | MPAA |
| 2024/25 | £60,000~ | £10,000 |
| 2023/24 | £60,000~ | £10,000 |
| 2022/23 | £40,000* | £4,000 |
| 2021/22 | £40,000* | £4,000 |
| 2020/21 | £40,000* | £4,000 |
| 2019/20 | £40,000** | £4,000 |
| 2018/19 | £40,000** | £4,000 |
| 2017/18 | £40,000** | £4,000 |
| 2016/17 | £40,000** | £10,000 |
| 2015/16 | £40,000 | £10,000 |
| 2014/15 | £40,000 | |
| 2013/14 | £50,000 | |
| 2012/13 | £50,000 | |
| 2011/12 | £50,000 | |
| 2010/11 | £255,000 | |
| 2009/10 | £245,000 | |
| 2008/09 | £235,000 | |
| 2007/08 | £225,000 | |
| 2006/07 | £215,000 |
~ Tapered to £10,000 for individuals with Threshold income above £200,000 & Adjusted Income above £260,000.
*Tapered to £4,000 for individuals with Threshold income above £200,000 & Adjusted Income above £240,000.
**Tapered to £10,000 for individuals with Threshold income above £110,000 & Adjusted Income above £150,000.