If the amount paid in the pension input period exceeds the annual allowance for that year an annual allowance charge must be paid, unless there is unused annual allowance to carry forward from previous pension input periods. Since the 2015/16 tax year, pension input periods have been aligned with tax years.
Money purchase annual allowance
Since 6 April 2015 there is an annual allowance called the money purchase annual allowance.  If the money purchase annual allowance is triggered, only £4,000 can be paid to all money-purchase plans in any pension input period before the annual allowance tax charge is applied. If this occurs part-way through a pension input period only the contributions made after the trigger are tested against the money purchase annual allowance. However, the total contributions/accrual in that tax year are also tested against the £40,000 annual allowance. For more information see our article Annual allowance.
Tapered annual allowance
Since 6 April 2016, individuals who have 'adjusted income' for a tax year of greater than £150,000 up to 5 April 2020 and £240,000 from 6 April 2020 have their annual allowance for that tax year restricted.
From 6 April 2020 - Individuals who have taxable income for a tax year of greater than £240,000 will have their annual allowance for that tax year restricted. It will be reduced, so that for every £2 of income they have over £240,000, their annual allowance is reduced by £1. Any resulting reduced annual allowance is rounded down to the nearest whole pound.
The maximum reduction is £36,000, so anyone with income of £312,000 or more will have an annual allowance of £4,000. Individuals with high income caught by the restriction may therefore have to reduce the contributions paid by them and/or their employers or suffer an annual allowance charge.
From 6 April 2016 to 5 April 2020 - Individuals who had taxable income greater than £150,000 had their annual allowance restricted. It was reduced, so that for every £2 of income they had over £150,000, their annual allowance was reduced by £1. The maximum reduction was £30,000, so anyone with income of £210,000 or more had an annual allowance of £10,000.
For more information see our article tapering of annual allowance.