Pension Carry Forward UK 2026/27: How to Use 3 Years of Unused Allowance

What Is the Pension Annual Allowance?

The pension annual allowance is the maximum amount you can contribute to all your registered pension schemes in a single tax year while still receiving tax relief. In 2026/27, the annual allowance is £60,000 (or 100% of your UK earnings, whichever is lower).

This covers:

• Your own contributions (employee/personal contributions)
• Your employer's contributions
• Any third-party contributions

Exceed the annual allowance and you face an annual allowance charge -- essentially a tax charge designed to claw back the tax relief on the excess.

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What Is the Carry Forward Rule?

The carry forward rule allows you to use unused annual allowance from the three previous tax years to make a larger pension contribution in the current year without triggering an annual allowance charge.

You carry forward the years in order, oldest first:

1. 2023/24 unused allowance
2. 2024/25 unused allowance
3. 2025/26 unused allowance

You can only use carry forward after you have filled your current year's full £60,000 allowance. Carry forward is added on top, not instead of.

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Eligibility Requirements

To use carry forward, you must meet two conditions:

1. You Were a Pension Scheme Member

You must have been an active member of a registered pension scheme in each tax year you want to carry forward from. You do not need to have made any contributions in that year -- simply being a member (including having a deferred or frozen pension) is sufficient.

If you had no pension at all in 2022/23, you cannot carry forward from that year, even if the allowance was technically available.

2. You Have UK Earnings This Year

Your total pension input for the year (current year allowance + carry forward) cannot exceed your UK relevant earnings for 2026/27. If you earn £80,000 and want to contribute £100,000 using carry forward, the earnings cap limits your relief to £80,000 regardless.

Note: This earnings limit does not apply to employer contributions -- only to the tax relief available to you personally.

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What Were the Annual Allowances in Previous Years?

To calculate how much you can carry forward, you need to know the allowance for each of the three previous years and how much was used:

The allowance has been £60,000 since April 2023 (when it was increased from £40,000). The lifetime allowance was abolished from April 2024.

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How to Calculate Available Carry Forward

Step 1: Find your "pension input amount" for each of the three prior years. This is the total of all contributions (yours + employer) to all schemes in that year.

Step 2: Subtract each year's pension input from that year's annual allowance to find unused allowance.

Step 3: Add the current year allowance (£60,000) to the total available.

Step 4: Check the earnings cap -- your total tax-relievable personal contributions cannot exceed your 2026/27 earnings.

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Worked Example: Using Carry Forward in 2026/27

Scenario

Sarah is a higher-rate taxpayer earning £120,000 per year. She has been a member of her employer's workplace pension since 2020. Her pension input amounts for previous years were:

Total Available in 2026/27

• Current year allowance: £60,000
• Carry forward from 2023/24: £45,000
• Carry forward from 2024/25: £45,000
• Carry forward from 2025/26: £40,000
• Total available: £190,000

But Sarah's earnings are £120,000, so she can only claim personal tax relief on up to £120,000 of personal contributions. Her employer can still contribute beyond this without the earnings cap affecting the employer's side.

If Sarah contributes £100,000 personally in 2026/27

• Uses current year £60,000 first
• Then uses 2023/24 carry forward: £40,000 (partial use)
• Total used: £100,000
• No annual allowance charge applies
• Remaining carry forward: £5,000 from 2023/24 + £45,000 from 2024/25 + £40,000 from 2025/26

Tax saving: At 40% higher rate, £100,000 contribution saves £40,000 in income tax (with higher and additional rate relief claimed via Self Assessment).

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Carry Forward and the Tapered Annual Allowance

If your "adjusted income" exceeds £260,000 in 2026/27, your annual allowance is tapered down. For every £2 of adjusted income above £260,000, the annual allowance reduces by £1, down to a minimum of £10,000 (for adjusted income above £360,000).

Critically: The tapered annual allowance also applies to carry forward years. If your allowance was tapered in a prior year, you carry forward only what was actually available to you in that year -- not the full £60,000.

Example of Tapering

If in 2024/25 your adjusted income was £300,000, your annual allowance in that year was:

£60,000 - ((£300,000 - £260,000) / 2) = £60,000 - £20,000 = £40,000

Your carry forward from 2024/25 would be based on a £40,000 allowance, not £60,000.

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The Money Purchase Annual Allowance (MPAA)

There is one major exception to the carry forward rules: the Money Purchase Annual Allowance (MPAA).

If you have flexibly accessed your pension -- for example, taken income via flexi-access drawdown or taken an uncrystallised fund pension lump sum (UFPLS) -- the MPAA is triggered. In 2026/27, the MPAA is £10,000.

Once the MPAA applies:

• Your allowance for money purchase (defined contribution) pensions is capped at £10,000
• You cannot use carry forward to increase the MPAA
• You retain the standard annual allowance (£60,000) for defined benefit pension accrual, but carry forward is complex in this situation

If you have accessed pension income flexibly, seek specialist advice before making large pension contributions.

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Defined Benefit Pensions and Carry Forward

For defined benefit (final salary or career average) pensions, the pension input is not simply your contributions -- it is the increase in the value of your benefits, measured using a set multiplier (16x the annual benefit increase, plus any increase in lump sum).

Calculating carry forward for DB schemes requires figures from your pension scheme administrator. Ask for your "pension input amount" for each of the three prior years.

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How to Claim Carry Forward Tax Relief

You do not need to pre-notify HMRC before using carry forward. However, you must:

1. Keep records showing your pension input amounts for the three prior years (pension statements or scheme certificates)
2. Report carry forward contributions on your Self Assessment tax return
3. Claim higher or additional rate relief on personal contributions through Self Assessment (basic rate relief is usually added at source)

If you pay as a sole trader or self-employed person, include pension contributions in the pension section of your tax return.

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Key Numbers for 2026/27

The pension carry forward rule is one of the most powerful planning tools available to UK taxpayers -- particularly self-employed individuals with variable income, business owners approaching a sale, or employees with large bonuses. Used correctly, it can shelter substantial sums from income tax at higher rates.