Pensions & RetirementPension Annual Allowance Carry Forward — How to Use Unused Allowance from Previous Years
How pension annual allowance carry forward works with worked examples. Use up to 3 years of unused allowance to make larger pension contributions without a tax charge.
The Annual Allowance is the maximum amount that can be paid into your pensions each year with tax relief. If you have not used the full amount in previous years, you can carry forward the unused allowance to make a larger contribution now.
Annual Allowance — Basics
| Detail | 2026/27 |
|---|
| Standard Annual Allowance | £60,000 |
| Tax-free pension contributions (below AA) | No tax charge |
| Tax charge if you exceed AA | At your marginal rate (20%/40%/45%) |
| Carry forward | Up to 3 previous years of unused allowance |
| Money Purchase Annual Allowance (MPAA) | £10,000 (if triggered) |
| Tapered Annual Allowance | Reduces for income above £260,000 (minimum £10,000) |
How Carry Forward Works
| Rule | Detail |
|---|
| How many years? | Up to 3 previous tax years |
| Which years for 2026/27? | 2023/24, 2024/25, and 2025/26 |
| Order | Oldest year’s unused allowance is used first |
| Must you have been in a pension scheme? | Yes — you must have been a member of a registered pension scheme in each year you carry forward from |
| Must you notify HMRC? | No — just keep records |
| Does employer contribution count? | Yes — both your and your employer’s contributions count towards the AA |
Worked Example 1 — Simple Carry Forward
A higher-rate taxpayer who has been in a workplace pension for several years:
| Tax year | Annual Allowance | Total pension input | Unused allowance |
|---|
| 2023/24 | £60,000 | £15,000 | £45,000 |
| 2024/25 | £60,000 | £20,000 | £40,000 |
| 2025/26 | £60,000 | £18,000 | £42,000 |
| 2026/27 (current year) | £60,000 | | |
| Total available 2026/27 | | | £187,000 |
This person could contribute up to £187,000 in 2026/27 without triggering an Annual Allowance tax charge (£60,000 current + £127,000 carried forward).
Important: The contribution cannot exceed their relevant UK earnings for the year. If they earn £100,000, they can contribute up to £100,000 (and the remaining carried-forward allowance is lost).
High-earning NHS consultants often have large pension input amounts due to the defined benefit scheme:
| Tax year | Annual Allowance | Pension Input Amount (PIA) | Unused/Excess |
|---|
| 2023/24 | £60,000 | £52,000 | £8,000 unused |
| 2024/25 | £60,000 | £58,000 | £2,000 unused |
| 2025/26 | £60,000 | £48,000 | £12,000 unused |
| 2026/27 | £60,000 | £70,000 | -£10,000 excess |
Without carry forward, this consultant would face a tax charge on £10,000 of excess contributions. With carry forward:
| Available carry forward | Amount |
|---|
| 2026/27 standard AA | £60,000 |
| Unused from 2023/24 | £8,000 |
| Unused from 2024/25 | £2,000 |
| Unused from 2025/26 | £12,000 |
| Total available | £82,000 |
The £70,000 pension input is within the £82,000 total — no tax charge.
Worked Example 3 — Self-Employed Person Making a Large One-Off Contribution
A self-employed person earning £80,000 who has contributed minimally to their SIPP for 3 years:
| Tax year | Annual Allowance | Contribution | Unused |
|---|
| 2023/24 | £60,000 | £5,000 | £55,000 |
| 2024/25 | £60,000 | £5,000 | £55,000 |
| 2025/26 | £60,000 | £5,000 | £55,000 |
| 2026/27 | £60,000 | Want to contribute £80,000 | |
Total available: £60,000 + £55,000 + £55,000 + £55,000 = £225,000
They can contribute £80,000 (limited to their earnings) with full tax relief:
| Tax relief calculation | Amount |
|---|
| Contribution | £80,000 |
| Basic rate relief (applied at source in a SIPP) | £16,000 reclaimed by the pension provider |
| Higher rate relief (claimed via Self Assessment) | £16,000 reclaimed by the contributor |
| Effective cost | £48,000 |
Related: How Pension Tax Relief Works
Tapered Annual Allowance
High earners face a reduced Annual Allowance:
| Detail | Amount |
|---|
| Adjusted income threshold | £260,000 |
| Threshold income | £200,000 |
| Taper | £1 reduction for every £2 above £260,000 adjusted income |
| Minimum tapered AA | £10,000 (for adjusted income of £360,000+) |
| Carry forward still available? | Yes — but you carry forward the tapered amount from previous years, not the full £60,000 |
Example — Tapered AA With Carry Forward
| Detail | Amount |
|---|
| 2026/27 adjusted income | £300,000 |
| Tapered AA for 2026/27 | £40,000 (reduced by £20,000) |
| Previous year tapered AA unused | £15,000 |
| Total available | £55,000 |
Money Purchase Annual Allowance (MPAA)
| Detail | Information |
|---|
| What triggers it | Taking taxable income from a defined contribution pension (not just the 25% tax-free lump sum) |
| Reduced allowance | £10,000 per year for money purchase contributions |
| Can you carry forward? | The MPAA cannot be carried forward. However, carry forward of the standard AA from years BEFORE the MPAA was triggered may still be possible for defined benefit pension inputs |
| Important | The MPAA only applies to money purchase (defined contribution) pensions — your defined benefit pension is assessed against the remaining “alternative Annual Allowance” |
How to Check Your Position
Defined Contribution Pensions (SIPPs, Workplace DC)
| Step | Action |
|---|
| 1 | Check your pension provider’s annual statements for contributions each year |
| 2 | Add your contributions + employer contributions = total pension input |
| 3 | Compare to the £60,000 AA for each year |
| 4 | The difference is your unused allowance to carry forward |
Defined Benefit Pensions (NHS, Teachers, Civil Service, etc.)
| Step | Action |
|---|
| 1 | Check your annual pension statement for the Pension Input Amount (PIA) |
| 2 | This is NOT the same as your salary deduction — it’s the increase in the value of your benefits |
| 3 | Compare the PIA to the £60,000 AA |
| 4 | The difference is your unused allowance |
Warning for DB scheme members: Salary increases, promotions, and bonuses can cause large spikes in your PIA. A significant pay rise in one year can push your PIA well above £60,000 — use carry forward to cover the excess.
Tax Charge If You Exceed the AA
| Detail | Information |
|---|
| Rate | Your marginal tax rate (20%, 40%, or 45%) |
| On what | The amount by which your pension input exceeds your available AA (including carry forward) |
| How to pay | Through your Self Assessment tax return |
| Scheme Pays | If the charge is £2,000+ and you exceeded the standard AA, you can ask your pension scheme to pay the charge from your pot |
| Deadline | Report on your Self Assessment by 31 January following the tax year |
Common Mistakes
| Mistake | Consequence |
|---|
| Forgetting employer contributions count | You exceed the AA without realising |
| Not checking pension input amounts for DB schemes | PIA can be much higher than salary deductions |
| Assuming carry forward is automatic | You must have been a pension scheme member in the carry-forward years |
| Making a contribution larger than earnings | Tax relief is limited to your relevant UK earnings |
| Not keeping records | If HMRC queries your carry forward, you need evidence |
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