Annual Allowance Tax Returns for High Earners
Written and reviewed by the Pension Tax Accountants editorial team. Last reviewed 29 July 2026.
If your pension savings for the year run past the £60,000 annual allowance for 2026/27, the excess can carry an annual allowance charge that has to be reported and paid through Self Assessment. We are the firm you hand that to. We work out whether a charge actually arises, and if it does, we put the right figures on your pension tax return.
The calculation is rarely a single number. Employer contributions count toward the allowance, unused allowance from the previous three years can be carried forward, and higher earners may have a tapered allowance that has to be worked out before anything else. This is the working end of what the annual allowance guide sets out in principle.
We are ACCA accountants handling the tax on your pension savings. We do not advise on which pension to hold, on transfers, or on how much you should contribute. Those are decisions for you and, where they concern the pension product itself, for an FCA-authorised adviser.
What the Annual Allowance Return Covers
We gather your pension input amounts across every scheme you contribute to, including employer contributions, and test them against the allowance for the year. Where you have unused allowance from earlier years we apply carry forward, using the current year first and then the previous three years in order.
For higher earners we calculate the tapered allowance before the charge, and we then report any excess correctly on your Self Assessment return. HMRC sets out the headline position on the annual allowance, and we turn that into the figures for your particular schemes.
Where Annual Allowance Charges Get Complicated
The taper only applies where your threshold income is over £200,000 and your adjusted income is over £260,000. From there the allowance falls by £1 for every £2 of adjusted income, down to a floor of £10,000 once adjusted income reaches £360,000. Getting the two income measures right is where most of the work sits.
A common trap is the annual allowance charge itself, which is not a flat rate. The excess is added to your income and taxed as a top slice at 20%, 40% or 45%, so the same excess can straddle two rates. A separate money purchase annual allowance of £10,000 applies once you have flexibly accessed a defined contribution pension, and it cannot be carried forward. The charge is defined in section 228 of the Finance Act 2004.
How We Run the Annual Allowance Work
We ask your schemes for pension savings statements, reconcile the input amounts, and prepare the computation with the carry forward and taper shown clearly so you can see how the figure was reached. If a charge arises we confirm whether the mandatory scheme pays route is available, which it is where the charge exceeds £2,000 and the scheme inputs exceed £60,000, and we prepare the election.
Where scheme pays applies we coordinate the paperwork with the scheme so the charge is settled from the pension rather than your own funds, and we make sure the return reflects that route.
What Annual Allowance Returns Cost
We work to a fixed fee agreed before we start, so you know the cost before any work begins. The fee reflects how many schemes are involved and whether a taper or scheme pays election is needed.
Many clients pair this with our pension tax relief claims work, because the same return that reports a charge often also reclaims relief owed to you, and both are best handled together.