What is pension carry forward and how does it work?

Full answer

**Pension carry forward** allows you to make a one-off large pension contribution by using unused Annual Allowance from the **three previous tax years**. This is useful if you have received a bonus, sold a business or had a high-income year. **2026/27 Annual Allowance:** £60,000 **How to calculate available carry forward (2026/27):** | Tax year | Annual Allowance | Your contributions | Unused | |---|---|---|---| | 2023/24 | £60,000 | Your figure | Up to £60,000 | | 2024/25 | £60,000 | Your figure | Up to £60,000 | | 2025/26 | £60,000 | Your figure | Up to £60,000 | | **2026/27** | £60,000 | Current year | — | Maximum possible (if fully unused in all 3 prior years + current year): £240,000 — but **capped by your earnings** in 2026/27. **Rules:** 1. **Earnings cap:** Total contributions (including employer) cannot exceed 100% of your UK earnings in the current tax year 2. **Membership requirement:** You must have been a **member of a registered pension scheme** in each year you wish to carry forward from (even if you made no contributions) 3. **Use current year first:** You must fully use the current year's allowance before carrying forward 4. **Oldest year first:** Use 2023/24 carry forward first, then 2024/25, then 2025/26 **Money Purchase Annual Allowance (MPAA):** If you have **flexibly accessed** pension benefits (drawn income from a flexi-access drawdown or taken an uncrystallised fund pension lump sum), your Money Purchase Annual Allowance is **£10,000** — and carry forward **cannot** be used for money purchase contributions. It only applies to defined benefit (DB) accrual carry forward. **Defined Benefit schemes:** For DB pensions, the "contribution" for Annual Allowance purposes is 16× the increase in annual pension entitlement.

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