Pension Annual Allowance 2026/27: How to Use Three Years of Carry Forward Before It Expires

Why the carry-forward deadline matters now

The pension annual allowance carry-forward rule is one of the most powerful — and most underused — tools in the UK tax planning toolkit. It allows large lump-sum pension contributions in a single year, using allowances that would otherwise expire forever on 5 April 2027.

If you had unused annual allowance in the 2023/24 tax year (which ended 5 April 2024), you have until 5 April 2027 to use it. That is the carry-forward window for that year: three years after the end of the relevant tax year. After that date, the unused 2023/24 allowance vanishes, regardless of circumstances.

For anyone who:

• received a significant bonus, inheritance, or sale proceeds in 2026 or 2027
• is self-employed with variable income and had a particularly good year
• has recently started earning a higher income and wants to catch up on pension saving
• is planning a large pension contribution before retirement

...checking carry-forward availability before April 2027 could save tens of thousands in tax.

The annual allowance: what counts

The annual allowance (AA) is the maximum you (plus your employer, plus any third parties) can contribute to UK registered pension schemes in a tax year while still receiving tax relief. For 2026/27, the standard annual allowance is £60,000.

What counts towards the AA:

If you have both a DC pension and a DB pension, the inputs from both are added together and measured against the single annual allowance.

The earnings limit: You cannot receive tax relief on contributions above 100% of your UK earnings in the year. If your earnings are £40,000, you can contribute up to £40,000 even if your carry-forward-enhanced AA is higher. Employer contributions are not subject to this earnings cap.

How carry forward works: step by step

You add unused allowances from the three previous tax years to your current-year allowance. The rules require you to use the oldest year first.

Available years for 2026/27 carry forward:

The maximum of £240,000 assumes zero contributions in all four years and sufficient earnings. In practice, almost everyone has made some contributions (even small employer contributions to a workplace scheme), so the real available amount is lower.

Worked example: the high earner catch-up

Emma is a consultant who incorporated her business in 2023. She had no personal pension contributions in 2023/24 or 2024/25 and modest contributions of £5,000 in 2025/26. She is now expecting a large contract payment and wants to make a significant pension contribution before April 2027.

Total available: £60,000 + £60,000 + £55,000 + £60,000 = £235,000

Emma wants to contribute £120,000. She must earn at least £120,000 in 2026/27 for the earnings limit not to apply (employer contributions from her own company are not subject to this limit).

How the allowance is used (oldest first):

1. Current year (2026/27): £60,000
2. Then 2023/24 carry-forward: £60,000 (uses up £60,000 of the £120,000)
3. Total used: £120,000 — Emma's contribution is fully within her available allowance

Tax relief on £120,000 contribution at 40% (higher rate): £48,000 of tax relief, split as basic rate relief claimed by the pension scheme automatically (£24,000) and higher-rate relief claimed via Self Assessment (£24,000).

Defined benefit schemes: the pension input amount trap

If you are a member of a defined benefit (DB) scheme — such as a public sector pension, NHS pension, or final salary scheme — the annual allowance works very differently.

Your "pension input amount" for a DB scheme is calculated as:

(Pension accrued at end of year - Pension accrued at start of year) × 16 + any separate lump sum accrual

This can produce unexpectedly large AA usage in years when your salary rises significantly — for example, if you receive a promotion or a large pay increase, the accrual-based calculation can put you close to or over the £60,000 AA without any new cash contributions.

For carry-forward purposes in a DB scheme:

You need the pension input amount for each carry-forward year from your scheme administrator. This is provided on your Pension Savings Statement — which your scheme must issue automatically if you exceeded the AA. If you were under the AA, you may need to request the statement.

Do not attempt carry-forward calculations for a DB pension without a proper pension input amount figure from your scheme.

The Tapered Annual Allowance: check before you act

High earners face a reduced annual allowance under the Tapered Annual Allowance (TAA) rules. Before using carry-forward, check whether TAA applies to you.

TAA triggers:

• Threshold income (income excluding pension contributions): above £200,000
• Adjusted income (income including employer pension contributions): above £260,000

If both tests are met, your annual allowance tapers by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000.

TAA and carry-forward:

TAA applies to carry-forward years as well. If you were subject to TAA in 2023/24, your available carry-forward from that year is not £60,000 — it is the tapered allowance that applied in 2023/24 minus contributions made that year.

Example:

In 2023/24, your adjusted income was £320,000. Your tapered AA was: £60,000 - ((£320,000 - £260,000) / 2) = £60,000 - £30,000 = £30,000. If you contributed £20,000 that year, your carry-forward from 2023/24 is only £10,000, not £40,000.

This is one reason high earners should work through their carry-forward calculation carefully — or with a financial adviser — before making large contributions.

The MPAA: another reason to check first

If you have already flexibly accessed your pension savings — by starting drawdown, taking an uncrystallised funds pension lump sum (UFPLS), or buying a flexible annuity — the Money Purchase Annual Allowance applies to future defined contribution contributions.

The MPAA for 2026/27 is £10,000, and carry-forward does not apply to this reduced allowance. There is no mechanism to use carry-forward to exceed £10,000 in DC pension contributions once the MPAA has been triggered.

The MPAA only applies to money purchase (DC) pensions. You can still accrue DB pension benefits with a higher allowance if you remain a DB scheme member.

Making the contribution: practical mechanics

Once you have calculated your available allowance, the mechanics depend on your pension type:

Personal pension / SIPP: Contribute directly. The pension provider claims 20% basic rate tax relief automatically (relief at source). If you are a higher-rate taxpayer, you claim the additional 20–25% relief via Self Assessment — enter total gross pension contributions on your SA return.

Workplace DC scheme: Large voluntary contributions should be discussed with your HR or payroll department. Many workplace schemes allow additional voluntary contributions (AVCs) via payroll, which gives immediate relief at your marginal rate (salary sacrifice) or via relief at source.

Self-employed / director: As a director, your company can make an employer contribution to your SIPP directly — the company claims it as a business expense, and it is not subject to the earnings limit that applies to personal contributions. This is often the most tax-efficient route for high earners who have discretion over their remuneration.

Timing: Contributions must be made before 5 April 2027 to count for 2026/27. For SIPP contributions, the payment must clear into the pension account by 5 April — do not leave a large transfer to the last day.

Is carry forward actually worth it?

The financial case for using carry-forward is strongest when:

1. You have high earnings this year that trigger 40% or 45% tax relief
2. You have a lump sum available — an inheritance, a bonus, proceeds from a property sale
3. Pension IHT from April 2027 is a factor — getting money into a pension before April 2027 means it is sheltered from IHT while inside the pension
4. You are approaching retirement and want to top up your pot in the final years of earning

The case is weaker if:

• You might need the money within 10 years (pensions are inaccessible until age 57 from 2028)
• Your marginal rate is only 20% (basic rate tax relief is still worthwhile, but less dramatic)
• You have credit card debt or mortgage at higher rates than your expected pension return

Record keeping for carry-forward claims

HMRC does not require you to formally claim carry-forward in advance. When you make a large pension contribution, carry-forward is applied automatically in your Self Assessment tax return.

You should keep records of:

• Pension scheme membership in each carry-forward year (a pension statement or membership certificate)
• Contributions made in each year (pension statements, payslips)
• Pension input amounts if in a DB scheme (pension savings statements)

HMRC can ask you to demonstrate that carry-forward was validly applied. If you are uncertain about your figures, contact your pension providers directly — they are required to provide you with pension savings statements on request.

Action checklist before 5 April 2027

• Check your pension statements for 2023/24, 2024/25, and 2025/26 — how much did you actually contribute each year?
• Verify scheme membership — were you a member of any UK registered pension scheme in each year?
• Check for TAA — do your income levels (current or in carry-forward years) trigger the tapered allowance?
• Check for MPAA — have you accessed any DC pension flexibly?
• Calculate your earnings limit — your total contribution (including employer) cannot exceed 100% of your earnings in the tax year
• Make contributions before 5 April 2027 — the 2023/24 unused allowance expires permanently on that date
• Consult a financial adviser if your situation involves TAA, DB schemes, or contributions over £100,000

The carry-forward mechanism is one of the few remaining ways to make very large, very tax-efficient pension contributions in a single year. For the right person at the right time, it can deliver tax relief on £60,000–£180,000 of additional contributions — but only if you act before the window closes.