Tapered annual allowance for pensions – The pensions annual allowance is the
maximum amount of tax-relieved pension savings that can be accrued in a year. For those on the
highest incomes, the annual allowance tapers down from £40,000. HM Treasury has reviewed
the tapered annual allowance and its impact on the NHS, as well as on public service delivery
more widely.

To support the delivery of public services, particularly in the NHS, the two tapered
annual allowance thresholds will each be raised by £90,000. This means that from 2020-21 the
“threshold income” will be £200,000, so individuals with income below this level will not be
affected by the tapered annual allowance, and the annual allowance will only begin to taper
down for individuals who also have an “adjusted income” above £240,000.

For those on the very highest incomes, the minimum level to which the annual allowance
can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only
affect individuals with total income (including pension accrual) over £300,000. Proposals to
offer greater pay in lieu of pensions for senior clinicians in the NHS pension scheme will not be
taken forward.

Lifetime allowance for pensions – The lifetime allowance, the maximum amount
someone can accrue in a registered pension scheme in a tax-efficient manner over their lifetime,
will increase in line with CPI for 2020-21, rising to £1,073,100.