SIPP Contributions and Carry Forward: Using 3 Years of Unused Allowance Before 5 April

Most people know the pension annual allowance is £60,000. Fewer realise that if you haven’t used it in previous years, you may be able to add much more than £60,000 to your pension this tax year - without a tax charge - using a rule called carry forward.

What carry forward actually is

Carry forward lets you use unused pension annual allowance from the previous three tax years, on top of your allowance for the current year. To use it, you must have been a member of a registered pension scheme (including a workplace pension you didn’t contribute much to) in each of the years you’re carrying allowance from - you don’t need to have made contributions, just been a member.

The annual allowance has been £60,000 since it was increased from £40,000 at the Spring Budget 2023, effective from the 2023/24 tax year. That means for the 2026/27 tax year, the three carry-forward years - 2023/24, 2024/25 and 2025/26 - each carry a £60,000 allowance, assuming you didn’t use it all at the time.

A worked example

Say you received a large bonus or sold a business this year and want to make a big pension contribution. If you contributed only £10,000 a year in each of the previous three tax years, and you’re a member of a pension scheme in each of those years:

• Unused allowance from 2023/24: £60,000 − £10,000 = £50,000
• Unused allowance from 2024/25: £60,000 − £10,000 = £50,000
• Unused allowance from 2025/26: £60,000 − £10,000 = £50,000
• Plus this year’s (2026/27) full allowance: £60,000
• Total potential contribution using carry forward: £210,000 - all with tax relief at your marginal rate, subject to the rules below.

The rules and limits that still apply

• You must use the current tax year’s allowance first, then draw on the earliest of the three carry-forward years before later ones.
• Tax relief on personal contributions is capped at 100% of your UK relevant earnings for the year you’re contributing in - carry forward increases how much can go in tax-efficiently, but doesn’t let you contribute more than you earned that year if the contribution is from your own pay (this cap doesn’t apply in the same way to employer contributions).
• High earners may have a tapered annual allowance. If your adjusted income is over £260,000, your standard £60,000 allowance reduces by £1 for every £2 of adjusted income above that, down to a minimum of £10,000 - which also affects how much carry-forward headroom you actually have from a tapered year.
• You still can’t exceed your Lump Sum and Death Benefit Allowance or other pension caps that apply when eventually taking benefits.

Why this matters before 5 April

Carry forward allowance doesn’t accumulate indefinitely - you lose access to a given year’s unused allowance once more than three tax years have passed. Practically, that means unused allowance from 2022/23 dropped out of scope after 5 April 2026, and unused 2023/24 allowance will drop out after 5 April 2027. If you’re planning a large contribution using carry forward, check which years are still in scope before the 5 April deadline for the current tax year, since the window closes permanently for the oldest available year each time a new tax year begins. This is a genuine, one-off opportunity to use real unused allowance - unlike trying to front-load salary sacrifice ahead of the 2029 NI cap, which resets every tax year and doesn’t actually let you get ahead of anything.

Who this is most useful for

• Anyone with a bonus, one-off windfall, or business sale in the current tax year who wants to shelter more of it from tax via a large pension contribution.
• Self-employed people with variable income, who may have had lower-earning years where they couldn’t contribute much, followed by a strong year.
• Higher and additional-rate taxpayers wanting to bring adjusted net income down for other reasons - such as staying under the £100,000 threshold for the Personal Allowance taper or Tax-Free Childcare eligibility (see our related articles).

The bottom line

If you’ve had a strong income year and haven’t used your full pension allowance in the last three tax years, carry forward can let you shelter significantly more than £60,000 this year - but check your scheme membership history and current-year earnings cap before relying on the full figure, and act before 5 April if the oldest eligible year is about to fall out of scope.