Carry forward lets a person add annual allowance they did not use in the previous three tax years to this year’s allowance, so a large contribution can be made without an annual allowance charge. The rule is in section 228A of the Finance Act 2004, and it only works for a past year in which the person was a member of a registered pension scheme. No claim or election is needed, but the figures must be worked out and kept.

How does carry forward work?

Section 228A says that where a person has unused annual allowance available, the annual allowance for the current tax year is treated as increased by that amount. Unused allowance for an earlier year is simply the allowance for that year minus the total pension input amount for that year. For 2019 to 2020 onwards, PTM055100 confirms that the look back is the previous three tax years.

GOV.UK states that you do not need to report carry forward to HMRC. PTM055200 adds that nothing needs to go on the tax return if carry forward means no charge is due, but that the individual should keep a record in case their savings exceed the allowance in a later year. For how the underlying allowance and charge work, see the pension annual allowance.

What is the membership requirement?

This is the condition that catches people out. Section 228A(4) says unused allowance can only come from a tax year in which the individual was a member of a registered pension scheme at some time during that year. PTM055100 explains that “member” includes an active member, a deferred member, a pensioner member or a pension credit member.

Two consequences follow. First, contributions are not needed. If someone was a member but nothing was paid in, section 228A(4)(b) treats the whole of that year’s allowance as unused. A long forgotten personal pension or a deferred workplace pension from a previous job is enough to make a year count. Second, a person who joins their first pension scheme this year cannot carry forward anything, however much allowance they have notionally “missed”. GOV.UK notes a narrow exception for members of certain overseas schemes that qualified for UK relief.

In what order is the allowance used?

The current year’s allowance is used first. Section 228A(6) only treats an earlier year’s surplus as used up where the savings in the later year exceeded that year’s own allowance, before any carry forward. Once the current year’s allowance is exhausted, unused allowance is taken from the earliest of the three years first, then the next, then the most recent (section 228A(7) and the GOV.UK guidance).

This ordering is helpful. The oldest year would drop out of the three year window next year anyway, so using it first preserves the more recent amounts. Any part of a year’s surplus not needed can still be used in a later year, as long as that year remains within the window.

How much could be available for 2026 to 2027?

For 2026 to 2027 the three earlier years are 2023 to 2024, 2024 to 2025 and 2025 to 2026. HMRC’s rates page shows a standard allowance of £60,000 for each of them and for 2026 to 2027. So someone who was a scheme member throughout, saved nothing in those years and was not affected by the taper could in principle have savings of up to £240,000 this year (£60,000 plus three years of £60,000) without a charge.

The available figure is lower where a past year was restricted:

  • If the tapered annual allowance applied in an earlier year, the unused amount is measured against the reduced allowance for that year (PTM055100).
  • If the alternative chargeable amount was used in an earlier year because the money purchase annual allowance applied, section 228A(8) measures the unused amount against the alternative annual allowance and the defined benefit inputs only.

Does carry forward give more tax relief?

No. Carry forward only prevents the annual allowance charge. It does not change the separate limit on relief for a member’s own contributions, which HMRC’s rates page sets at the higher of 100% of UK taxable earnings or £3,600. Someone with £50,000 of earnings cannot get relief on a £150,000 personal contribution just because they have unused allowance.

That earnings limit concerns contributions made by the individual. This is why carry forward is most often used with employer contributions, typically by a company director whose company makes a single large payment; see pension contributions and tax relief for business owners and, for when the company’s deduction may have to be spread, spreading large pension contributions.

A worked illustration

Illustration only. Priya is a director and has had a personal pension since 2018, so she was a member in every year below. The taper does not apply to her.

Tax year Allowance Pension input Unused
2023 to 2024 £60,000 £20,000 £40,000
2024 to 2025 £60,000 £50,000 £10,000
2025 to 2026 £60,000 £0 £60,000

In 2026 to 2027 her company pays £130,000 into her pension. The first £60,000 uses the current year’s allowance. The remaining £70,000 is covered by £40,000 from 2023 to 2024, then £10,000 from 2024 to 2025, then £20,000 from 2025 to 2026. There is no charge. She has £40,000 of 2025 to 2026 allowance left, which can still be carried into 2027 to 2028 and 2028 to 2029.

How do you find the figures?

A member can ask each scheme administrator for their pension input amounts for the last three tax years (PTM056200). For defined benefit schemes the input is the growth in value, not the contributions, so the scheme’s figure is essential. HMRC provides an online calculator, but GOV.UK says it cannot be used for hybrid schemes or where a flexible drawdown declaration was accepted before 6 April 2015; those cases need a manual calculation.

How does carry forward interact with the money purchase annual allowance?

GOV.UK is explicit that unused money purchase annual allowance cannot be carried forward, and that unused allowance from earlier years cannot reduce an excess over the money purchase annual allowance. Carry forward can still be added to the alternative annual allowance, which covers defined benefit saving. Anyone who has flexibly accessed a pension should therefore not rely on carry forward to fund large defined contribution payments.

What mistakes come up most often?

  • Assuming a year counts because the person had earnings, when they were not a member of any registered scheme in that year.
  • Going back four years, or forgetting that the oldest surplus falls away each April.
  • Using last year’s surplus first and losing the older year’s surplus.
  • Ignoring defined benefit growth in an earlier year, which may have used much of that year’s allowance.
  • Using the full standard allowance for a year in which the taper reduced it.
  • Making a large personal contribution in excess of relevant earnings and expecting relief because allowance is available.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.