Pensions carry forward - a quick guide

The payment of pension contributions to maximise the current tax year’s annual allowance and to make full use of carry forward is an important consideration for higher and additional rate taxpayers. 

The standard annual allowance is currently £60,000 a year. Carry forward allows individuals to carry forward any unused allowances from the three previous tax years and add these to the allowance for the current tax year. This means that, potentially, up to £220,000 could be payable in the current tax year without breaching the annual allowance (£60,000 each for 2025/26, 2024/25 and 2023/24 plus £40,000 for 2022/23). 

To be eligible for carry forward the individual must have been a member of a registered UK pension scheme in the tax year(s) they wish to carry forward from. There is no requirement to have made any contributions in those years and deferred or pensioner membership provides eligibility. 

The annual allowance for the current tax year must be used first and then carry forward relief is used in chronological order with the earliest year first. 

Example 

Sam has paid the following contributions and wants to know the maximum additional contribution they could make in the current tax year:

Sam has £20,000 of annual allowance still available for the current tax year. They can then add the £16,000 available from 2022/23 and the £20,000 from 2023/24 to give a total maximum additional contribution of £56,000. 

If Sam doesn’t pay more than a further £20,000 in the current tax year (i.e. £60,000 in total) the £16,000 available from 2022/23 will be lost. 

Note that, if they are making personal contributions, they would need relevant UK earnings of at least the total contribution amount, i.e. £96,000 in the current tax year, to be eligible for tax relief on the full contributions. It is not possible to carry forward unused earnings, only the unused annual allowances. 

Where the individual exceeds the annual allowance in one of the two previous tax years then you need to look back further to determine if any excess can be offset against earlier years. For example, if the contribution in 2024/25 had been £70,000, rather than £60,000, the contributions for 2021/22 would need to be checked to see if the £10,000 excess could be offset with any carry forward available from that year. 

Where an individual is a high earner and is, or has been, subject to tapering, their tapered annual allowance will need to be calculated for each of the relevant tax years. The current limits are £200,000 Threshold Income and £260,000 Adjusted Income. (And these were the same in 2023/24 and 2024/25.) Adjusted Income was £240,000 from tax years 2020/21 to 2022/23, so the annual allowance and any carry forward for those earlier years will be based on this lower income limit. (Threshold Income was £200,000 from tax years 2020/21 to 2022/23.) The annual allowance and any carry forward for tax years prior to 2020/21, will be based on Threshold Income of £110,000 and Adjusted Income of £150,000. 

Where an individual has triggered the Money Purchase Annual Allowance, their annual allowance for money purchase (defined contribution) pension contributions reduces to £10,000 a year and no carry forward is available. However, carry forward is still available in respect of accrual to a defined benefit (final salary) pension scheme.

If you or someone you know would like some guidance on making pension contributions or assistance with making investment decisions within a pension, get in touch and arrange a free initial consultation.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The information in this article is based on current laws and regulations which are subject to change as at future legislations.

The value of your investment can fall as well as rise and is not  guaranteed.

The information in this article is correct as at 17/09/25.