Pension Annual Allowance Carry Forward: How to Use It

The pension annual allowance carry forward rule lets you contribute more than £60,000 to your pension in a single tax year without triggering a tax charge. You can reach back up to three years to use unused allowance from 2021/22, 2022/23, and 2023/24. This matters if you receive a bonus, inheritance, or sell a property and want to shelter a large sum in your pension while claiming tax relief.

What is pension annual allowance carry forward?

Carry forward is a rule that lets you use any unused annual allowance from the previous three tax years, on top of this year's £60,000 limit. If you contributed less than the maximum in those years, the leftover allowance rolls forward for three years only. After three years, it expires.

Example: in 2021/22 you contributed £20,000 to your pension. The annual allowance that year was £40,000, so you have £20,000 unused. That £20,000 remains available to carry forward until the end of 2024/25. If you do not use it by then, it disappears.

The current annual allowance is £60,000 (increased from £40,000 in April 2023). Older tax years still use their original limits: £40,000 for 2021/22 and 2022/23. You carry forward the actual unused amount from each year, not a flat £60,000.

Carry forward includes all contributions — your own payments, employer contributions, and the tax relief the government adds. If you put in £8,000 net and the government tops it up to £10,000 through basic-rate relief, that counts as £10,000 toward your allowance. Check GOV.UK for the latest thresholds and rules.

Who can use carry forward?

You must meet two conditions:

• You were a member of a UK registered pension scheme in each of the three previous tax years you want to carry forward from. Membership means you had an active pension — workplace pension, SIPP, or personal pension — even if you contributed nothing.
• You have relevant UK earnings (salary, self-employment income, or taxable benefits) at least equal to the gross contribution you want to make this year. If you earn £50,000, you cannot contribute more than £50,000 gross, even with carry forward available.

If you were not a pension scheme member in 2021/22, you cannot use carry forward from that year. The three-year window only includes years where you held pension membership for at least one day.

There is no minimum contribution in the earlier years. If you contributed £0 in 2022/23 but were a scheme member, you can carry forward the full £40,000 from that year (the allowance in force at the time).

The tapered annual allowance can reduce your £60,000 limit if your threshold income exceeds £200,000 and adjusted income exceeds £260,000. The taper cuts your allowance by £1 for every £2 over £260,000, down to a minimum of £10,000. Carry forward still applies, but you use the reduced allowance from each year, not the standard amount. This is complex — speak to a financial adviser if you are affected.

How to calculate your carry forward allowance

Work backwards from the oldest year first. HMRC applies carry forward in date order: 2021/22, then 2022/23, then 2023/24. You cannot cherry-pick which year to use.

Step-by-step:

1. List the annual allowance for each of the last three tax years: 2021/22 (£40,000), 2022/23 (£40,000), 2023/24 (£60,000).
2. Find your total gross pension contributions in each year. Include employer contributions and tax relief. If you do not have records, request a pension statement from your provider or check your payslips.
3. Subtract what you used from the allowance in each year. The remainder is your unused allowance.
4. Add up the three unused amounts. That total, plus this year's £60,000, is your maximum contribution for 2024/25 without a tax charge.

Example calculation:

• 2021/22: contributed £15,000, allowance £40,000 → unused £25,000
• 2022/23: contributed £10,000, allowance £40,000 → unused £30,000
• 2023/24: contributed £20,000, allowance £60,000 → unused £40,000
• Total unused: £25,000 + £30,000 + £40,000 = £95,000
• 2024/25 allowance: £60,000
• Maximum you can contribute in 2024/25: £60,000 + £95,000 = £155,000 (subject to your earnings limit)

If you contribute £100,000 in 2024/25, you use this year's £60,000 first, then £25,000 from 2021/22, then £15,000 from 2022/23. The rest of your carry forward (£15,000 from 2022/23 and £40,000 from 2023/24) remains available for next year, as long as it has not aged out.

Remember: carry forward expires three years after the tax year it came from. Unused allowance from 2021/22 must be used by 5 April 2025. After that, it is gone.

How carry forward works with employer contributions

Employer contributions count toward your annual allowance just like your own payments. If your employer pays £30,000 into your pension and you add £10,000, that is £40,000 used. Carry forward applies to the combined total.

This catches people by surprise when they receive a one-off employer contribution — a bonus redirected into the pension through salary sacrifice, or an employer match on a large personal contribution. If the total exceeds £60,000, you need carry forward to avoid an annual allowance charge.

Example: you normally contribute £10,000 a year (including employer match). In 2024/25, you receive a £60,000 bonus and salary-sacrifice it into your pension. Your total contribution for the year is now £70,000 (bonus plus your regular £10,000). You have exceeded the £60,000 annual allowance by £10,000. If you have at least £10,000 unused allowance from the previous three years, carry forward covers the excess and you pay no tax charge. If not, you will owe tax on the £10,000 overage at your marginal rate.

Check your payslips and annual pension statements to track employer contributions. Some schemes show the gross amount (including tax relief), others show net. Always work in gross figures when calculating your allowance usage.

What happens if you exceed your allowance (even with carry forward)?

If you contribute more than your annual allowance plus carry forward, you face an annual allowance charge. HMRC treats the excess as income and taxes it at your marginal rate. If you are a higher-rate taxpayer, you pay 40% on the excess. Additional-rate taxpayers pay 45%.

You report the charge on your self-assessment tax return. The deadline is 31 January following the end of the tax year (so 31 January 2026 for excess contributions in 2024/25). Some pension schemes offer scheme pays, where the pension provider pays the tax charge and reduces your pension pot by the equivalent amount. You must request this before the self-assessment deadline, and not all schemes participate.

Annual allowance charges are not refundable. If you overpay into your pension by accident, you cannot withdraw the money without triggering further tax. Prevention is critical: calculate your position before making large contributions, especially if you have already maxed out your regular pension savings.

Common carry forward scenarios

Scenario 1: Career break
You took a year off in 2022/23 and made no pension contributions. You remained a member of your workplace scheme (many employers allow this for up to two years). In 2024/25, you return to work and want to catch up. You can carry forward the full £40,000 from 2022/23, plus any unused allowance from 2021/22 and 2023/24, as long as your earnings support the contribution.

Scenario 2: Inheritance or property sale
You inherit £80,000 or sell a buy-to-let. You want to put the entire sum into your pension for tax relief. Your salary is £50,000, so your gross contribution cannot exceed £50,000 in 2024/25 (earnings cap). Even if you have £100,000 carry forward available, you can only use £50,000 this year. Consider spreading the contribution over two tax years, or increasing your salary (if self-employed) to raise your earnings limit.

Scenario 3: Job change
You changed jobs in 2023/24 and started a new workplace pension. Your old pension contributions still count toward your annual allowance for that year. If you contributed £20,000 to the old scheme and £15,000 to the new one, you used £35,000 of the £60,000 allowance, leaving £25,000 to carry forward.

Scenario 4: Multiple pensions
You have a workplace pension and a SIPP. You contribute £12,000 to the workplace scheme and £8,000 to the SIPP in 2024/25. Total: £20,000. You have £40,000 allowance remaining, plus carry forward. All your pensions count as one pool for annual allowance purposes — you cannot have separate limits for each scheme.

Carry forward and the lifetime allowance (historical context)

The lifetime allowance was abolished from 6 April 2024. Before that, your total pension savings could not exceed £1,073,100 without triggering a tax charge. Carry forward helped you stay under the annual limit, but large contributions could push you over the lifetime allowance if your pot grew quickly. This is no longer an issue.

If you have lifetime allowance protection (fixed protection, individual protection, or enhanced protection), check whether making a large contribution using carry forward will invalidate your protection. Some protections prohibit new contributions entirely. Speak to a pension specialist before proceeding.

Practical steps to use carry forward

1. Gather pension statements for the last three tax years. If you cannot find a pension, use the Pension Tracing Service (GOV.UK).
2. Add up gross contributions for each year (yours, employer, and tax relief).
3. Calculate unused allowance for 2021/22, 2022/23, and 2023/24 using the limits in force at the time.
4. Confirm you were a pension scheme member in all three years. If not, exclude years where you had no membership.
5. Check your earnings for 2024/25. Your gross contribution cannot exceed your relevant UK earnings, even with carry forward.
6. Decide how much to contribute. Use this year's £60,000 first, then oldest carry forward.
7. Inform your pension provider. Some require a carry forward declaration before accepting contributions above £60,000.
8. Keep records. HMRC may ask for proof if you claim carry forward on your tax return.

If your situation is complex — tapered allowance, multiple employers, or protected lifetime allowance — consider paying for one-off advice from a regulated financial adviser. MoneyHelper (moneyhelper.org.uk) offers free, impartial guidance but cannot give personal recommendations.

Carry forward deadlines and record-keeping

Unused allowance from 2021/22 expires on 5 April 2025. After that, you can only carry forward from 2022/23, 2023/24, and 2024/25. Each year, the oldest slice drops off.

Keep pension statements and contribution records for at least six years. If HMRC opens an enquiry into your tax return, you must prove your carry forward calculation. Missing records can result in an annual allowance charge, even if you genuinely had unused allowance.

If you are self-employed or control your own company, be precise about when contributions are paid. HMRC treats contributions as made on the date your pension provider receives the money, not the date you instructed the payment. A contribution sent on 4 April 2025 but received on 6 April 2025 counts toward 2025/26, not 2024/25.

Annual allowance statements: your pension provider must send you a statement if your contributions exceed £60,000 in a tax year (including employer contributions). You need this to complete your self-assessment. If you do not receive one by 6 October following the tax year, contact your provider.

Carry forward for high earners and the tapered allowance

If your adjusted income exceeds £260,000, your annual allowance tapers down to a minimum of £10,000. Adjusted income includes your salary, bonuses, rental income, investment income, and employer pension contributions.

The taper works as follows: for every £2 your adjusted income exceeds £260,000, your annual allowance reduces by £1. If your adjusted income is £280,000, you lose £10,000 of allowance (£20,000 over the threshold ÷ 2). Your annual allowance becomes £50,000 instead of £60,000.

Carry forward applies to the tapered amount. If your allowance was reduced to £30,000 in 2022/23 and you contributed £20,000, you have £10,000 to carry forward from that year, not £20,000. Calculate the taper for each historical year separately — the £260,000 threshold and £60,000 starting allowance only apply from 2023/24 onwards. Earlier years used different figures (£240,000 threshold, £40,000 allowance).

Threshold income must also exceed £200,000 for the taper to apply. Threshold income is your adjusted income minus employer pension contributions. This creates a cliff edge: if your employer contributes £50,000, you might escape the taper even if your salary is high. Some executives use large employer contributions to stay under the threshold income limit.

This is specialist territory. If your income is anywhere near these levels, pay for regulated advice. The cost is trivial compared to the tax charge if you get it wrong.

Why carry forward matters now

The annual allowance increased to £60,000 in April 2023, and the lifetime allowance disappeared in April 2024. This makes pensions more attractive for mid-to-late career savers who want to boost retirement savings quickly without hitting a tax ceiling.

Carry forward lets you front-load contributions when you have the cash — after selling a business, downsizing a home, or receiving a redundancy payout. You claim up to 45% tax relief on contributions (if you are an additional-rate taxpayer), and the money grows tax-free inside the pension until you take it at 55 (rising to 57 from April 2028).

Example: you are 50, earn £100,000 a year, and sell a rental property for £150,000 profit. You have contributed £10,000 to your pension each year for the last three years (using £10,000 of the £40,000 or £60,000 allowance each year). Your carry forward is £30,000 + £30,000 + £50,000 = £110,000, plus this year's £60,000 = £170,000 total. You can contribute up to £100,000 this year (capped by your earnings), claim 40% tax relief (£40,000 back via your tax return), and shelter the entire sum from income tax and capital gains tax going forward.

The alternative — putting the £100,000 into an ISA — gives you tax-free growth but no upfront relief. For higher and additional-rate taxpayers, the pension is usually better, assuming you can wait until 55 (or 57) to access the money. For guidance on pension versus ISA prioritisation, see Plain Investing (plaininvesting.co.uk).

If you are unsure how much to save, read our guide on how much to put in your pension. Carry forward gives you flexibility, but only if you have earnings and past membership to support it.

This is general information, not personalised financial advice. Rules and allowances change — check GOV.UK or speak to a regulated adviser (MoneyHelper offers free, impartial guidance).