Carry forward

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
  • The annual allowance has been £40,000 since the 2014/15 tax year.
  • Defined benefit accruals are valued using a factor of 16 and the value of the opening entitlement is increased in line with CPI.
  • 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 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.
  • 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.

How carry forward works in practice

There are a number of 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. Remember contributions made by an individual need to be supported by relevant UK earnings, employer contributions do not.
  2. Calculate the pension input amounts for the three carry forward years.
  3. Subtract the pension input amounts for the earliest carry forward year (2019/20). Subtract the pension input amounts from the annual allowance the answer is the amount that can be carried forward for that year. If the result is negative*, this carries forward to the next year as zero.
  4. Repeat the same process for the second carry forward year (2020/21). 
  5. Repeat the same process for the third carry forward year (2021/22).

The answer 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.

For more information, see:

Money purchase annual allowance 

It's not possible to carry forward unused annual allowance against the money purchase annual allowance. Money purchase contributions must be limited to £4,000 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 still applies to a defined benefit plan. For more information, see An explanation of the money purchase annual allowance (MPAA).

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 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 for high incomes - adjusted and threshold incomes and HMRC Pensions Tax Manual - PTM057100: Annual allowance: tapered annual allowance


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.

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.