Pension Carry Forward 2026/27: Using Up Three Years of Unused Annual Allowance
If you haven't used your full £60,000 pension annual allowance in the last three tax years, carry forward lets you contribute more this year and still get tax relief. Here's how the rules actually work.
What Carry Forward Actually Does
The pension annual allowance for 2026/27 is £60,000 — the maximum amount that can be contributed to your pension(s) in a tax year while still receiving tax relief, without triggering an annual allowance charge. Carry forward lets you supplement this year's allowance with any unused allowance from the three previous tax years, provided you were a member of a registered pension scheme in each of those years.
| Tax year | Annual allowance | Amount contributed | Unused allowance available to carry forward |
|---|---|---|---|
| 2023/24 | £60,000 | £20,000 | £40,000 |
| 2024/25 | £60,000 | £15,000 | £45,000 |
| 2025/26 | £60,000 | £25,000 | £35,000 |
| 2026/27 (current) | £60,000 | — | Current year allowance |
In this example, the individual has £40,000 + £45,000 + £35,000 = £120,000 of unused allowance available to carry forward, on top of the current year's £60,000 — a theoretical maximum contribution of £180,000 in 2026/27, assuming their earnings support it.
The Earnings Cap: Why the Theoretical Maximum Rarely Applies
Tax relief on pension contributions is capped by your relevant UK earnings in the tax year the contribution is made — regardless of how much unused allowance carry forward provides. Relevant earnings broadly means employment income, self-employment profits, or similar earned income (not investment income, rental income, or pension income itself).
Example: Someone with £120,000 of carried-forward unused allowance but only £70,000 of salary in the current tax year can only get tax relief on contributions up to £70,000 — the carry forward provides headroom under the annual allowance limit, but doesn't override the separate earnings-based cap on tax relief.
This makes carry forward most useful for people with a genuinely high income in the current year (a bonus year, sale of a business, inheritance used to top up a pension while still earning enough to support the contribution) rather than people with modest ongoing earnings but large unused allowance from previous years.
Order of Use: Current Year First, Then Oldest Carried-Forward Year
HMRC's rules require the current tax year's £60,000 allowance to be used in full before any carried-forward allowance is applied. Once exhausted, carried-forward allowance is used starting with the oldest of the three available years first.
| Contribution made | How it's allocated |
|---|---|
| £60,000 | Fully uses 2026/27 current allowance |
| £100,000 | £60,000 uses current year; £40,000 draws from 2023/24 (oldest) unused allowance first |
| £180,000 | Uses all of current year, then 2023/24, then 2024/25, then 2025/26 in that order |
Carry Forward and the Tapered Annual Allowance
High earners with adjusted income above £260,000 for 2026/27 have their annual allowance tapered down — reduced by £1 for every £2 of adjusted income above the threshold, to a floor of £10,000 for the highest earners. This taper applied (at whatever the relevant threshold was) in each of the previous three years too, which affects how much unused allowance is genuinely available to carry forward.
Important: when carrying forward from a year where the taper applied, it's the tapered allowance for that year (not the standard £60,000, or the historic £40,000/£10,000 depending on the year in question) that determines the unused amount available — a consistently high earner may find they have much less carry-forward headroom than the simple 3 x £60,000 calculation suggests, because their allowance in each of those years was already reduced.
Membership Requirement: A Common Trap
You can only carry forward unused allowance from a tax year in which you were a member of a registered pension scheme — even if no contribution was actually made that year. This catches out people who took a career break, were between jobs without a workplace pension, or opted out of auto-enrolment for a period — if you weren't a scheme member at all in one of the three earlier years, that year's allowance simply isn't available to carry forward, regardless of how much headroom it would otherwise offer.
Defined Benefit Pensions: A More Complex Calculation
For members of defined benefit (final salary or career average) schemes, "unused allowance" isn't simply the difference between contributions made and £60,000 — it's based on the increase in the value of accrued pension benefits over the year, calculated using a specific HMRC formula (broadly, the increase in annual pension multiplied by 16, plus any increase in a linked lump sum). This calculation is typically provided by the scheme administrator as a "pension input amount" statement.
Anyone with a defined benefit pension who wants to use carry forward — for example, to make a large contribution to a separate defined contribution scheme in a high-earning year — should request pension input amount statements for the relevant years from their DB scheme administrator before assuming a particular level of unused allowance is available.
Practical Steps to Use Carry Forward
- Gather pension contribution statements (or pension input amount statements for DB schemes) for the current and previous three tax years.
- Confirm scheme membership status for each of the three earlier years — carry forward is unavailable for any year you weren't a member.
- Calculate unused allowance for each year, accounting for any taper that applied in that specific year.
- Check current-year relevant UK earnings, since this caps the tax-relievable contribution regardless of allowance headroom.
- Consider getting professional pension advice before making a large carry-forward contribution, particularly where DB pensions, high income, or the tapered allowance are involved — the calculations have several interacting variables and errors can trigger an unexpected annual allowance tax charge.
Frequently asked questions
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