Pension Carry Forward: How to Use Three Years of Unused Allowance in 2026/27
Carry forward lets you use up to three years of unused pension annual allowance in 2026/27. Learn the order of use, MPAA restrictions, and worked examples for high earners.
Carry forward is one of the most valuable but underused pension planning tools available to UK taxpayers. If your pension contributions have been lower than the maximum in recent years, you may be able to make a much larger contribution in 2026/27 without triggering the annual allowance charge. For business owners who have just sold a company, high earners with volatile income, or anyone who has had a late start on pension saving, carry forward can make a significant difference to retirement savings and immediate tax bills.
How the pension annual allowance and carry forward interact
The pension annual allowance (AA) is the maximum total pension input amount -- the combined value of employer and employee contributions to defined contribution schemes, plus the value of accrual in defined benefit schemes -- that can be made in a tax year without triggering an annual allowance charge. For 2026/27, the AA is £60,000.
Carry forward allows you to use any portion of the annual allowance that was not used in the three preceding tax years. The key rule is that your total pension input amount in the current year can exceed the current year's annual allowance, provided the excess is covered by carry-forward from unused prior years.
The annual allowance charge (the tax on excess contributions) applies at your marginal income tax rate on the excess -- so 40% or 45% for most people who exceed the allowance. Carry forward eliminates or reduces this charge.
Which years can be carried forward in 2026/27?
For 2026/27, the three carry-forward years are:
| Tax year | Annual allowance | Available to carry forward if unused |
|---|---|---|
| 2023/24 | £60,000 | Up to £60,000 |
| 2024/25 | £60,000 | Up to £60,000 |
| 2025/26 | £60,000 | Up to £60,000 |
The 2022/23 year (when the AA was £40,000) has dropped out of scope as of 2026/27 -- you can no longer use 2022/23 unused allowance.
Order of use: current year first, then earliest year
HMRC's rules specify a mandatory order:
- Use the current year's annual allowance first (£60,000 in 2026/27).
- Then use the earliest available carry-forward year first (2023/24).
- Then 2024/25.
- Then 2025/26.
You cannot reorder this. This matters because if an earlier year's carry forward is used up but later years remain available, you need to track which years' allowances have been exhausted.
Worked example: business sale followed by large SIPP contribution
Sarah sells her business in 2026/27 and receives significant proceeds. She wants to make a large pension contribution to shelter the gain and reduce her income tax bill. She has been a member of her workplace pension since 2019, but contributions have been modest:
- 2023/24: Pension input amount £10,000; unused allowance £50,000.
- 2024/25: Pension input amount £8,000; unused allowance £52,000.
- 2025/26: Pension input amount £12,000; unused allowance £48,000.
Her total carry forward available = £50,000 + £52,000 + £48,000 = £150,000.
In 2026/27, she contributes £210,000 to her SIPP. The annual allowance charge calculation:
- Current year AA used: £60,000 (fills current year first).
- Remaining excess: £150,000.
- Carry forward from 2023/24: £50,000 used.
- Carry forward from 2024/25: £52,000 used.
- Carry forward from 2025/26: £48,000 used.
- Total carry forward used: £150,000.
- No annual allowance charge arises.
Sarah must have earnings of at least £210,000 in 2026/27 to receive full income tax relief on this contribution. If her earnings are lower (say, £150,000 from the sale proceeds plus other income), relief is capped at her earnings.
Worked example: high earner planning
James earns £230,000 a year, giving him a tapered annual allowance. His threshold income exceeds £200,000 and adjusted income exceeds £260,000, so the taper applies. His tapered AA is:
- Adjusted income: £240,000 (earnings) -- so excess above £260,000 would be £0 if income is £240k.
- Wait -- at £230,000 adjusted income, he is below £260,000, so no taper applies.
Let us revise: James earns £290,000. Adjusted income = £290,000. Taper: (£290,000 - £260,000) / 2 = £15,000 reduction. Tapered AA = £60,000 - £15,000 = £45,000.
His available carry forward from prior years must also use the tapered AA in those years (not the full £60,000). If his tapered AA was £30,000 in 2023/24 and he contributed £5,000, his carry forward from 2023/24 is £25,000 -- not £50,000.
MPAA: when carry forward is blocked
The Money Purchase Annual Allowance (MPAA) of £10,000 applies once a taxpayer has "flexibly accessed" their pension -- for example, by taking income drawdown, taking an uncrystallised fund pension lump sum (UFPLS), or receiving a flexi-access drawdown payment.
Once the MPAA is triggered:
- The £10,000 MPAA applies to money purchase (defined contribution) contributions.
- Carry forward cannot be used to increase contributions above the MPAA.
- A separate "alternative annual allowance" of up to £50,000 applies to defined benefit accrual (if any).
The inability to use carry forward makes it very important to think carefully before flexibly accessing pension savings -- once the MPAA is triggered, it applies for all future years.
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Open Pension calculatorFrequently asked questions
What is pension carry forward?
Pension carry forward allows you to use unused pension annual allowance from the three previous tax years. This lets you make larger pension contributions in the current year than the standard £60,000 annual allowance would otherwise permit. The total you can contribute using carry forward depends on how much allowance was used in each of the three prior years.
How much can I carry forward in 2026/27?
In 2026/27, you can use unused annual allowance from 2023/24, 2024/25, and 2025/26. The standard annual allowance for each of those years was £60,000. If you made no pension contributions at all in those three years, you could theoretically carry forward up to £180,000 -- plus the current year's £60,000 -- giving a maximum contribution of £240,000 in 2026/27.
Do I need to have been a member of a pension scheme in the carry-forward years?
Yes. You must have been a member of a registered pension scheme in each year from which you wish to carry forward unused allowance. You do not need to have made contributions in those years -- simply being a member is sufficient. If you were not a pension scheme member in a particular year, you cannot carry forward from that year.
In what order must carry forward be used?
Current year allowance must be used first, then the earliest available carry-forward year (i.e., 2023/24 before 2024/25 before 2025/26). This order is fixed by HMRC rules. You cannot cherry-pick which year's allowance to use first.
Does carry forward affect the tapered annual allowance?
Yes. If you are subject to the tapered annual allowance (because your threshold income exceeds £200,000 and adjusted income exceeds £260,000), you can only carry forward the unused portion of your tapered allowance from each year -- not the full £60,000. This can significantly reduce the available carry forward for very high earners.
Can I use carry forward if the Money Purchase Annual Allowance (MPAA) has been triggered?
No. Once you have flexibly accessed pension funds (triggering the MPAA), the MPAA applies to money purchase (defined contribution) contributions. The MPAA for 2026/27 is £10,000. You cannot use carry forward to increase contributions above the MPAA. Carry forward only applies to the standard annual allowance and cannot 'top up' the MPAA.
Does my earnings limit affect how much I can contribute using carry forward?
Yes. You can only receive tax relief on pension contributions up to 100% of your UK earnings in the current tax year (or £3,600 if your earnings are lower). Even if carry forward allows a higher contribution, your contributions cannot exceed your relevant UK earnings in the current year to attract income tax relief.
Is carry forward available for defined benefit pension schemes?
Yes, but calculating the 'contribution' for a defined benefit scheme is more complex. For DB purposes, the pension input amount is the increase in the capitalised value of your pension over the year (using a factor of 16 x annual increase plus any lump sum increase). Carry forward from DB years uses the same principle -- whatever unused DB annual allowance existed in each prior year.
How do I claim carry forward on my tax return?
You report pension contributions and carry forward on the self-assessment return (SA100). Box 11 of the pension pages asks about contributions exceeding the annual allowance before carry forward. HMRC applies carry forward automatically when calculating whether an annual allowance charge arises. However, you should keep evidence of your pension membership in each carry-forward year.
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