How does pension Annual Allowance carry forward work?

Full answer

The pension Annual Allowance limits how much you (and your employer, combined) can pay into your pension each tax year while still receiving full tax relief -- £60,000 for most people in 2026/27, though this is reduced for very high earners through the tapered Annual Allowance. Carry forward allows you to make use of any Annual Allowance you did not fully use in the three previous tax years, added on top of your current year's allowance, which is particularly useful if you have had an unusually high-income year, received a large bonus, or want to catch up on pension saving after a period of lower contributions. To use carry forward, you work through the three previous tax years starting with the earliest, using any unused allowance from that year first, then the next, and so on -- crucially, you must have been a member of a registered pension scheme in each year you want to carry forward from, even if you did not contribute anything that year, and your total contribution (including the carried-forward amount) cannot exceed your UK relevant earnings for the current tax year, since tax relief is only available on contributions up to 100% of earnings. For example, someone who has £20,000 of unused allowance from three years ago, £15,000 from two years ago and £10,000 from last year, alongside this year's full £60,000 allowance, could in principle contribute up to £105,000 in the current tax year and still receive tax relief on the whole amount, provided their earnings support it. Anyone subject to the tapered Annual Allowance because their adjusted income exceeds £260,000 should take particular care, as their carry-forward calculation uses the reduced allowance that applied in each of those earlier years, not the standard £60,000.

More answers

• How does the tapered pension Annual Allowance work in 2026/27?
• How much tax do I pay on £105,000 in the UK?