The new tapered allowance means that top earners will see the annual allowance reduced from the current £40,000 to £10,000.

From April 2016, high earners with adjusted annual incomes, including their own and employer’s pension contributions, of over £150,000 will be subject to a taper mechanism which will be applied to the Annual Allowance.

For every £2 of adjusted income over £150,000, an individual’s Annual Allowance, the limit on the amount of tax relieved pension saving that can be made by an individual or their employer each year, will be reduced by £1, down to a minimum of £10,000.

To ensure this measure is focused on the higher and additional rate tax payers who currently gain the most benefit from pensions tax relief, those with income, excluding pension contributions, below a £110,000 threshold will not be subject to a Tapered Annual Allowance.