Comparison · Pension Allowances · 2026
Tapered Annual Allowance vs Carry Forward 2026: How High Earners Maximise Pension Relief
High earners face a shrinking pension allowance through the taper, but carry forward can restore room for a large contribution. These two rules are often confused but they pull in opposite directions: one limits this year's allowance, the other unlocks unused allowance from the past. This guide explains how they interact for 2026/27.
TL;DR -- 30-Second Summary
- • Standard allowance: GBP 60,000 for 2026/27 across all pensions
- • Taper: cuts the allowance by GBP 1 per GBP 2 of adjusted income over GBP 260,000, floor GBP 10,000
- • Two-test gate: taper only bites if threshold income also exceeds GBP 200,000
- • Carry forward: use unused allowance from the previous three tax years
- • They combine: taper sets this year's allowance; carry forward adds last three years' unused room
Side-by-Side Comparison
| Feature | Tapered Annual Allowance | Carry Forward |
|---|---|---|
| Effect | Reduces this year's allowance | Adds unused allowance from past 3 years |
| Who it affects | High earners over the income thresholds | Anyone with unused allowance and prior membership |
| Key trigger | Adjusted income over GBP 260,000 and threshold income over GBP 200,000 | Current year allowance used in full first |
| Range / limit | GBP 60,000 down to GBP 10,000 minimum | Up to 3 prior years' unused amounts |
| Order of use | Sets the starting allowance | Oldest year first after current year |
| Blocked by MPAA? | Separate rule | Yes -- no carry forward for money purchase once MPAA applies |
How the Taper Works
The standard annual allowance is GBP 60,000 for 2026/27. For high earners it is tapered: for every GBP 2 of adjusted income above GBP 260,000, the allowance is reduced by GBP 1, down to a minimum of GBP 10,000 once adjusted income reaches GBP 360,000. So someone with adjusted income of GBP 300,000 has their allowance cut by GBP 20,000 (half of the GBP 40,000 excess), leaving GBP 40,000.
Crucially, the taper only applies if your threshold income also exceeds GBP 200,000. Threshold income broadly excludes your own gross personal pension contributions, while adjusted income adds back employer contributions. This two-test gate protects people whose high adjusted income comes mainly from large employer pension contributions, and it means a personal contribution that drops threshold income below GBP 200,000 can switch off the taper completely.
How Carry Forward Works
Carry forward lets you mop up unused annual allowance from the previous three tax years. You must first use the current year's allowance in full, then draw on unused allowance from the earliest of the three prior years, working forwards. You must have been a member of a registered pension scheme in each year you carry forward from, although you did not need to contribute in those years.
For tapered years, you can only carry forward the unused portion of the lower tapered allowance that actually applied, not the full GBP 60,000. Personal contributions remain capped at 100% of your relevant UK earnings in the year you contribute, so carry forward does not let you exceed your earnings with personal contributions, though employer contributions are not limited by earnings.
Worked Example: GBP 300,000 Adjusted Income
A senior executive has adjusted income of GBP 300,000 and threshold income above GBP 200,000 in 2026/27, so the taper applies. Their allowance is reduced by GBP 20,000 (half of the GBP 40,000 excess over GBP 260,000), giving a tapered allowance of GBP 40,000. They also have unused allowance from the previous three years.
| Source | Allowance available | Already used | Unused / usable |
|---|---|---|---|
| Current year (tapered) | GBP 40,000 | GBP 0 | GBP 40,000 |
| Year -3 | GBP 40,000 (tapered) | GBP 30,000 | GBP 10,000 |
| Year -2 | GBP 60,000 | GBP 50,000 | GBP 10,000 |
| Year -1 | GBP 60,000 | GBP 45,000 | GBP 15,000 |
| Total usable this year | GBP 40,000 + GBP 10,000 + GBP 10,000 + GBP 15,000 = GBP 75,000 | ||
Although the taper alone would cap this year at GBP 40,000, carry forward of GBP 35,000 of unused allowance from the previous three years lifts the total to GBP 75,000 that can be contributed without an annual allowance charge. Note the year-3 figure uses the lower tapered allowance of GBP 40,000, not GBP 60,000, because that year was also tapered.
When the Taper Bites, When Carry Forward Rescues You
The taper bites when both income tests are met -- threshold income over GBP 200,000 and adjusted income over GBP 260,000. The first defensive move is to check whether a personal pension contribution can pull threshold income below GBP 200,000, which switches the taper off entirely. Spreading bonuses or deferring income across tax years can also help manage the thresholds.
Carry forward rescues you when you want to make a one-off large contribution -- after a bonus, a business sale or simply catching up -- and the current year allowance, possibly tapered, is too small. Provided you were a scheme member in the prior years and use the current year first, you can stack up to three years of unused allowance on top. The two rules are complementary, not competing: model both together before deciding how much to contribute.