Tapering of annual allowance - Rex

Rex is self-employed with income of £240,000 this tax year.

He also has dividends from investments of £10,000. So, his total taxable earnings are £250,000.

To calculate his threshold income, take his taxable income of £250,000 and deduct a pension contribution of £195,000 he made to his personal pension plan.

Rex's threshold income is £250,000 minus £55,000 which equals £195,000. As this is below £200,000 taper does not apply.