Pension carry forward: using unused annual allowance from the last 3 tax years
Published · 5 min read · Figures checked . UK rules and rates change, so check the official sources below before you act.
Pension carry forward lets some people use unused annual allowance from the three previous tax years. This guide explains the 2026/27 figures, the rules on membership and order of use, and a worked example.
What the annual allowance is
The annual allowance is the limit on how much can be saved into your private pensions in one tax year (6 April to 5 April) before a tax charge can apply. It counts everything going in across all your pensions, including your own payments, your employer's payments and tax relief added by a provider. For a defined contribution pension, where you build a pot of money, it counts the contributions. For a defined benefit pension, which promises an income based on salary and service, it counts the increase in the value of the benefit over the year.
The standard allowance is £60,000 for 2026/27, and it was also £60,000 in 2023/24, 2024/25 and 2025/26. Before that, in 2022/23, it was £40,000. Carry forward is the rule that allows unused allowance from earlier years to be added to the current year's allowance, so that pension savings above £60,000 in one year may not be taxed if earlier years left room. It only affects whether the annual allowance charge applies.
How carry forward works
Unused allowance means the part of a year's annual allowance that your pension savings did not fill. If your savings in a year came to less than your allowance, the gap can be carried forward for up to three tax years after it arose. In 2026/27 the years that can be looked at are therefore 2023/24, 2024/25 and 2025/26. The current year's allowance is always used first. Only once that is full does the earliest of the earlier years come into play, then the next, in date order.
There is one membership condition. To carry forward from a given year, you must have been a member of a registered pension scheme at some point in that year, which HMRC says includes active, deferred, pensioner and pension credit members. You do not need to have paid anything in. A member who made no contributions that year can carry forward the full allowance for it. A year in which you were not in any scheme cannot be used. You do not need to report carry forward to HMRC, so keeping your own records of past statements is useful.
- Years are used earliest first, so the oldest year drops out of reach first.
- Where the money purchase annual allowance applies, unused standard allowance cannot be added to it.
A worked example
This example uses invented figures and is not a forecast or a suggestion. Suppose someone was a pension scheme member throughout, had pension savings of £20,000 in 2023/24, £50,000 in 2024/25 and £60,000 in 2025/26, and has £95,000 going in during 2026/27 from all sources. Their unused allowance is £60,000 minus £20,000, which is £40,000 for 2023/24; £60,000 minus £50,000, which is £10,000 for 2024/25; and nothing for 2025/26. The total available through carry forward is £40,000 plus £10,000, which is £50,000.
For 2026/27, the current allowance of £60,000 is used first. The amount above it is £95,000 minus £60,000, which is £35,000. That is covered from the earliest year, 2023/24, leaving £40,000 minus £35,000, which is £5,000 of 2023/24 unused. Together with the £10,000 from 2024/25, £15,000 of carried-forward room remains. Because the look-back is three years, in 2027/28 the window moves to 2024/25, 2025/26 and 2026/27, so any unused 2023/24 allowance could no longer be used.
Limits that still apply
Carry forward raises the annual allowance charge threshold; it does not lift the separate limit on tax relief for your own contributions. GOV.UK says tax relief is available on personal contributions up to 100% of your annual earnings, and HMRC can ask for repayment of relief on anything above that. Employer contributions still count towards the annual allowance. People with little or no earnings can receive relief on contributions up to £2,880 a year (which a provider tops up with 20% relief to a gross £3,600), subject to GOV.UK's rules.
Two other rules reduce the room. The tapered annual allowance reduces the allowance for people with threshold income over £200,000 and adjusted income over £260,000, and the minimum tapered allowance in 2026/27 is £10,000. Carry forward then measures earlier years against that year's own allowance, which for 2022/23 was £40,000. The money purchase annual allowance, £10,000 in 2026/27, applies after flexibly taking money from certain defined contribution pots, such as drawdown income or uncrystallised lump sums. If it applies, unused allowance from earlier years cannot be added to the standard allowance, and unused money purchase allowance cannot itself be carried forward.
Common mistakes and where to get help
Common problems include assuming only your own payments count, forgetting employer contributions and defined benefit increases, and overlooking a year in which the allowance was £40,000 rather than £60,000. Another is losing track of the order, since the earliest year is used first. Defined benefit and hybrid schemes can make working out the annual figures harder, and HMRC says people with a hybrid scheme must work out their own figures instead of using its calculator. You can ask each provider for your pension savings details.
If an annual allowance charge applies, either you or the pension provider pays it, and it is reported in the Pension savings tax charges section of Self Assessment even where the scheme pays. Free, impartial guidance is available from MoneyHelper, and many people with complicated pension histories choose to speak to a regulated adviser. The rules described here cover the whole UK, although Scottish Income Tax rates differ, which can affect the rate at which higher rate relief is claimed.
Check before you act
Allowances, thresholds and reporting rules can change, and individual circumstances differ. Please confirm figures and conditions on the official pages linked below, and use HMRC's online calculator or your pension providers' statements for your own years, before relying on this general guide.
Sources
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