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Phil Thomas
Senior Technical Support Consultant

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Carry forward of pension annual allowance

Published  06 April 2026
   13 min read

Carry forward allows unused annual allowance from pension input periods ending in the three previous tax years to be carried forward and added to the annual allowance for the current pension input period.

Key facts

  • Currently, the annual allowance is £60,000 and the money purchase annual allowance is £10,000.
  • The tapered annual allowance applies to individuals who have ‘adjusted income’ over £260,000 a year. The annual allowance is tapered down to as low as £10,000 for individuals earning over £360,000.
  • You must use up the annual allowance in the current pension input period first, then go back to the earliest of the three carry forward years that are available.
  • You must have been in a pension arrangement in an earlier year to have unused annual allowance to carry forward, although you don't have to have contributed in that year.
  • You can still use carry forward if the tapered annual allowance applies.
  • If the money purchase annual allowance applies you cannot carry forward unused annual allowance to a money purchase plan.

What are the carry forward rules?

It is only possible to carry forward from a tax year where the individual was a member of a registered pension scheme.  They can carry forward unused annual allowance from the previous three tax years. The unused annual allowance doesn’t need to be from the registered pension scheme they’re looking to contribute to. A member includes either:

  • an active member
  • a pensioner member
  • a deferred member
  • a pension credit member of a pension scheme.

HMRC Pensions Tax Manual - PTM055100: When members can carry forward unused annual allowance

There are several steps that need to be followed to work out the maximum amount that can be carried forward.

  1. Make sure the current annual allowance is used up. If the individual is subject to the tapered annual allowance, it is the reduced annual allowance that needs to be used in the calculation.
  2. Calculate the pension input amounts for the three carry forward years. Remember you can only carry forward from years where the individual was a member of a registered pension scheme, so in some cases this may be less than three years. 
  3. Subtract the pension input amounts for the earliest carry forward year (2023/24) from the annual allowance; the answer is the amount that can be carried forward for that year. If the result is zero or negative*, this carries forward to the next year as zero.
  4. Repeat the same process for the second carry forward year (2024/25).
  5. Repeat the same process for the third carry forward year (2025/26).

The total of these figures is the maximum amount that can be carried forward to the current pension input period.

*If the result is negative, the individual will either have used carry forward or been liable for the annual allowance charge in that year.

If the contribution is to be made by anybody other than the individual’s employer, then the individual needs to have relevant UK earnings in the current tax year of at least the amount of the gross contribution to be paid. If their earnings are less, then they are unable to pay the full amount.

The carry forward calculation section below demonstrates a good process to follow to work out the carry forward available to an individual. 

Is it possible to carry forward unused annual allowance against the money purchase annual allowance (MPAA)?

It's not possible to carry forward unused annual allowance against the MPPA. Money purchase contributions must be limited to £10,000 to avoid a money purchase annual allowance tax charge.

However, it's possible to carry forward unused annual allowance against the full annual allowance if it applies to a defined benefit plan. For more information, see An explanation of the money purchase annual allowance (MPAA).

Tapered annual allowance

For every £2 of income an individual has over their adjusted income threshold that applies to that tax year, the annual allowance is reduced by £1. The earnings thresholds and minimum tapered annual allowance have changed over time. It is essential that when checking the taper that applies in a specific year the correct basis is used.

Dates
Threshold income
Adjusted income
Maximum reduction in annual allowance
Minimum annual allowance
6 April 2016 to 5 April 2020 £110,000 £150,000 £30,000 £10,000
6 April 2020 to 5 April 2023 £200,000 £240,000 £36,000 £4,000
Since 6 April 2023 £200,000 £260,000 £50,000 £10,000

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 income
Subject to taper? (Y/N)
Available annual allowance1
2023/24 £280,000 £372,000 Y £10,000 
2024/25 £300,000 £355,000 Y £12,500
2025/26 £240,000 £280,000 Y £50,000
2026/27 £255,000 £315,000 Y £32,500

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).

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          
2026/27          

Let's look at a worked example

Tax year
Annual allowance2
Total contributions3
Carry forward available
Carry forward used
Carry forward remaining
2023/24 £10,000 £4,000 £6,000 None £6,0004
2024/25 £12,500 £15,000 None £2,5004 £3,500
2025/26 £50,000 £50,000 None None £3,500
2026/27 £32,500 £35,000 None £2,5005 £1,0006

2Annual allowance figures in this example are based on the tapered annual allowance shown in the table earlier in this article.

3For 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.

4Of the £6,000 of carry forward available in 2023/24, £2,500 is used to cover the excess for the 2024/25 tax year.

5The excess of £2,500 in 2026/27 is covered by the £3,500 remaining unused annual allowance from 2023/24.

6The carry forward remaining of £1,000 in 2026/27, has been carried forward from 2023/24. This will cease to be available on 6 April 2027 as it will be outside the carry forward period.

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 2026/27 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.

Carry forward - frequently asked questions

Let’s look at some frequently asked questions we receive about carry forward.

If the individual was a member of any registered pension scheme in the year they want to carry forward from, they’ll be able to use carry forward. The definition of member is very broad and includes an active, deferred, pensioner and pension credit member. 

It’s not possible to use carry forward to pay contributions to a defined contribution/money purchase scheme above the money purchase annual allowance without an annual allowance tax charge being due. When the money purchase annual allowance is triggered, tax relievable contributions to defined contribution/money purchase schemes are limited to a maximum of £10,000. Contributions above that amount attracts an annual allowance charge. Carry forward is still available for any defined benefit scheme funding.

No. They will need relevant UK earnings in the year of payment to support any personal contributions.

For example, if there’s £100,000 worth of unused carry forward, the individual will need earnings of at least £100,000 to make a personal contribution of this level and receive tax relief.

A contribution made by an employer is not limited to the individual’s relevant earnings. But it’s subject to the wholly and exclusively rule.

Carry forward can still be used if the taper applies, you simply substitute the tapered annual allowance for the standard annual allowance in the calculations. The taper was introduced in tax year 2016/17 and the income limits have changed over time.

No, although it makes sense to keep records in case HMRC query any contributions in the future.

Disclaimer

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.