Pension Carry Forward Explained
A rule that lets you bring forward unused pension annual allowance from the past 3 years, allowing you to make larger pension contributions without triggering the Annual Allowance Charge.
What is Pension Carry Forward?
Carry forward is a provision that allows you to use any unused pension annual allowance from the previous 3 tax years. If you contributed less than £60,000 (or the prevailing allowance for that year) in any of those years, the unused portion can be carried forward and used in the current year.
How it works
You must have been a member of a registered pension scheme in each year from which you want to carry forward. The current year's allowance is used first, then the earliest unused year. If you had no pension scheme membership in a prior year, you cannot carry forward from that year. Total contributions (yours plus employer) still cannot exceed your annual earnings.
Real example
In 2022-23, Jenny contributed £20,000 to her pension (allowance was £40,000). In 2023-24, she contributed £30,000 (allowance £60,000). In 2024-25, she contributed £25,000 (allowance £60,000). Unused allowances: £20,000 + £30,000 + £35,000 = £85,000. In 2025-26, Jenny can contribute up to £145,000 (£60,000 current year plus £85,000 carried forward), provided she earns at least that amount.
Who does this affect?
Anyone who has been a member of a pension scheme for at least 3 years and has unused allowance from those years. It is most commonly used by people receiving a large bonus, windfall or inheritance who want to make a substantial pension contribution. Higher and additional rate taxpayers benefit most because pension contributions receive tax relief at their marginal rate.
HMRC source
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