Annual allowance taper ignores the s. 228ZA threshold-income test and employer contributions in adjusted income #2244

What happens

pension_annual_allowance tapers the allowance when adjusted_net_income exceeds annual_allowance.taper: max(minimum, default − 0.5 × max(0, ANI − taper)). The parameters date the taper from 2015-04-01 at £240,000 with a £4,000 minimum, then £260,000 and £10,000 from 2023-04-06.

The law (FA 2004 s. 228ZA, current text)

• The taper applies only to a "high-income individual": adjusted income above £260,000 and threshold income above £260,000 minus the s. 228 allowance, so £200,000 (s. 228ZA(3)).
• Adjusted income is net income plus net-pay and claimed pension relief, plus the total pension input amount less the individual's own contributions, so employer contributions and defined-benefit accrual count (s. 228ZA(4)).
• Threshold income adds back salary sacrificed for pension provision after 9 July 2015, and deducts relief-at-source contributions (s. 228ZA(5)).
• The reduction is rounded down to a whole pound (s. 228ZA(2)).

The taper was introduced for 2016-17. The earlier thresholds should be checked against the amending Finance Acts when fixing: as I understand them, adjusted income £150,000, threshold income £110,000 and a £10,000 minimum for 2016-17 to 2019-20, then £240,000, £200,000 and £4,000 for 2020-21 to 2022-23. The model has no taper before 2016-17 in law but applies one from 2015.

Fix

Model adjusted income and threshold income as the statute defines them, add the threshold-income condition, round the reduction down to £1, and date the parameters to the amending Acts. Property tests: the allowance is never below the minimum, never above the s. 228 amount, non-increasing in adjusted income, and untapered whenever threshold income is at or below the limit.

Found while fixing #2237 (#2240). The fiscal-event replay (PolicyEngine/policyengine-scorecard#157) reverses Spring Budget 2023's taper change, so this affects that leg.