Written by PensionTaxReliefCalculator Editorial. Reviewed against official UK guidance. Methodology
Carry forward lets you contribute more than £60,000 in a single tax year by using unused annual allowance from the three previous years. Useful for bonus earners, business owners and anyone whose income fluctuates.
Carry forward is a rule that allows you to use unused annual allowance from the three previous tax years when your pension inputs in the current year exceed the standard £60,000 limit. It is particularly valuable for people whose income is irregular, business owners taking large dividends in good years, employees receiving significant bonuses, or professionals who have recently moved into higher earning roles. Without carry forward, anyone who wants to make a large one-off pension contribution is constrained to £60,000 regardless of their history.
The mechanics are straightforward. First, use the current year's full allowance (£60,000 for 2026/27). Then apply carry forward from the earliest of the three previous years first (2023/24), then 2024/25, then 2025/26. The carry-forward amount from each year is that year's annual allowance minus total pension inputs in that year. Unused allowance from years before the three-year window is lost permanently.
To calculate carry forward, you need to know: (1) the annual allowance for each of the past three tax years, £60,000 for 2023/24, 2024/25 and 2025/26; and (2) your total pension inputs for each of those years (employee contributions + employer contributions for DC, or the DB accrual calculation for DB). Available carry forward from each year = annual allowance − pension inputs, subject to a minimum of zero.
For example, if in 2023/24 you had total pension inputs of £10,000, in 2024/25 £15,000, and in 2025/26 £20,000, your available carry forward is: £50,000 + £45,000 + £40,000 = £135,000. Adding the current year's £60,000 allowance, you can contribute up to £195,000 in 2026/27, subject to the 100% earnings cap.
Carry forward is particularly effective when a large income event creates tax exposure. An employee receiving a £50,000 bonus on top of a £60,000 salary, who has accumulated £120,000 of carry-forward allowance, could sacrifice the entire bonus into a pension plus £60,000 of salary, a total contribution of £110,000, within the combined current-year-plus-carry-forward limit. The income tax and NI saving on the bonus at 40%/2% rates is very substantial.
For owner-managed businesses, carry forward enables large employer pension contributions in profitable years, reducing both personal tax and corporation tax (employer pension contributions are a deductible business expense). A sole director with three years of minimal pension inputs might accumulate close to £180,000 of carry-forward allowance, all deployable in a single year if earnings permit.
If you use carry forward correctly, there should be no annual allowance charge because your total inputs remain within the combined allowance. The risk arises if carry forward is miscalculated, for example if pension inputs in earlier years were higher than assumed, or if membership of a DB scheme was overlooked. Always obtain your pension input amounts from your scheme administrators rather than estimating, as DB inputs in particular can be unexpectedly large.
You must have been a member of a registered pension scheme in each of the three previous tax years to use that year's unused allowance. You do not need to have actually made contributions, simply being enrolled in a workplace pension, even if making no contributions, qualifies you. It is worth keeping a note of your membership dates for all schemes.
Yes. The annual allowance was £40,000 in 2022/23 and prior years. If you are using carry forward from 2023/24, the allowance was £60,000. From 2022/23 it was £40,000. The available carry forward is the actual allowance for that year minus actual pension inputs in that year.
In theory you can carry forward up to three years of full unused allowance, up to £180,000 (3 × £60,000) if you made no contributions in those years. However, your total contributions in the carry-forward year are still capped at 100% of your relevant UK earnings in that year. So if you earned £80,000, you cannot contribute more than £80,000 in total regardless of available carry forward.