Carry forward calculations
Performing a carry forward of annual allowance calculation can seem daunting and it might seem that using a carry forward calculator would make it easier. However, the difficulty in doing the calculation is gathering the information needed, rather than the calculation itself. Once you have the information, we find the following process is an easy way to work out how much unused annual allowance is available to carry forward.
We have split the process into two steps:
Step 1
Check if the individual is subject to the tapered annual allowance
For an explanation of the difference between adjusted and threshold income, examples of the process and the calculations see our article Tapering of annual allowance for high incomes - adjusted and threshold incomes and HMRC Pensions Tax Manual - PTM057100: Annual allowance: tapered annual allowance.
You’ll need to know the individual’s threshold income and adjusted income for the tax year where carry forward is being used and for the previous three tax years (or more if carry forward has already been used in an earlier tax year).
Tax year
|
Threshold income
|
Adjusted income2
|
Subject to taper? (Y/N)
|
Available annual allowance1
|
| 2021/22 |
£210,000 |
£250,000 |
Y |
£35,000 |
| 2022/23 |
£220,000 |
£230,000 |
N |
£40,000 |
| 2023/24 |
£280,000 |
£372,000 |
Y |
£4,000 |
| 2024/25 |
£300,000 |
£360,000 |
Y |
£10,000 |
| 2025/26 |
£240,000 |
£280,000 |
Y |
£50,000 |
Click here to see a worked example on how to calculate threshold income.
Click here to see a worked example on how to calculate adjusted income.
1 Where the adjusted income limit is over £260,000, the annual allowance is calculated as: £60,000 – ((adjusted income - £260,000) x ½).
2 Adjusted income threshold was £150,000 between 6 April 2016 and 5 April 2020 and £240,000 between 6 April 2020 and 5 April 2023.
Step 2
Using the template below, calculate the carry forward available.
Tax year
|
Annual allowance
|
Total contributions
|
Carry forward available
|
Carry forward used
|
Carry forward remaining
|
| 2021/22 |
|
|
|
|
|
| 2022/23 |
|
|
|
|
|
| 2023/24 |
|
|
|
|
|
| 2024/25 |
|
|
|
|
|
| 2025/26 |
|
|
|
|
|
Let's look at a worked example
Tax year
|
Annual allowance3
|
Total contributions4
|
Carry forward available
|
Carry forward used
|
Carry forward remaining
|
| 2021/22 |
£35,000 |
£20,000 |
£15,000 |
£6,0005 |
£9,0006 |
| 2022/23 |
£40,000 |
£15,000 |
£25,000 |
£11,0007 |
£14,0008 |
| 2023/24 |
£4,000 |
£4,000 |
None |
None |
None |
| 2024/25 |
£10,000 |
£16,000 |
None |
None5 |
None |
| 2025/26 |
£50,000 |
£61,000 |
None |
None7 |
None |
3Annual allowance figures in this example are based on the tapered annual allowance shown in the table earlier in this article.
4For defined contributions plans, this is the amount of contributions made during the pension input period. For defined benefit, it is the value of benefits accrued over the pension input period. You should ask the relevant scheme for this information.
5£6,000 of carry forward available in 2021/22 is used to cover the excess for the 2024/25 tax year.
6The remaining £9,000 available will go unused and ceased to be available after 5 April 2025.
7£11,000 of carry forward available in 2022/23 is used to cover the excess for the 2025/26 tax year.
8The remaining £14,000 is available to cover any excess up to 5 April 2026.
Things to remember
- Even after using carry forward, tax relief on individual contributions is restricted to the higher of £3,600 gross or 100% of relevant UK earnings.
- If the money purchase annual allowance applies, it’s not possible to carry forward unused annual allowance to a defined contribution plan.
Our Tapering of annual allowance - High incomes article tells you how to calculated adjusted and threshold income and we give you examples below.
Worked example of threshold income
In 2025/26 Andy, an employee of Widgets Plc, has a salary of £270,000 and as a member of his employer’s scheme, pays 10% of his salary (£27,000) through a net pay arrangement. Andy’s employer pension input amount is also £27,000.
Andy also pays £240 net per month into a separate personal pension scheme.
Andy has £4,000 interest from savings (however £1,900 is from an ISA so is not subject to tax) leaving savings income of £2,100 subject to tax.
Andy also has a portfolio of shares that generated dividends of £3,500.
Step 1 – Andy’s net income is:
Employment income - £270,000
+Savings income - £2,100
+Dividend income - £3,500
= £275,600
Step 2 – Andy hasn’t entered into a salary exchange arrangement since 8 July 2015, so there is nothing to add at step 2 in respect of a relevant salary exchange arrangement.
= £275,600
Step 3 – Deduct the amount of contributions paid using relief at source and net pay arrangement.
Relief at source (£240 + £60 tax relief) x 12 = £3,600
Net pay arrangement = £27,000
= £275,600 - £3,600 - £27,000 = £245,000
Step 4 – Andy has received no taxed lump sum death benefits so there’s nothing to deduct.
Andy’s threshold income = £245,000.
As his threshold income is over £200,000, the tapered reduction may apply.
Worked example of adjusted income
Please refer to the threshold income example for the background information:
Step 1 – Andy’s net income is £275,600
Step 2 – ADD the employer contributions = £275,600 + £27,000 = £302,600
Step 3 – Andy has received no taxed lump sum death benefits so there’s nothing to deduct.
Andy’s adjusted income is £302,600.
The excess over the adjusted income limit is £42,600.
His annual allowance is therefore reduced by half of that - £21,300.
His annual allowance for the tax year is therefore £38,700.
