The Pension Carry-Forward Rule: How to Use Unused Allowance From the Last 3 Years

We’ve covered carry forward in detail in our ISA & SIPP tax planning series - this is the pensions-focused version, for anyone who came here first. If a bonus, business sale, or strong income year means you want to put more than £60,000 into your pension this year, carry forward may let you do exactly that without an annual allowance tax charge.

The rule in brief

You can use unused pension annual allowance from the previous three tax years, on top of this year’s £60,000 allowance, provided you were a member of a registered pension scheme (even with no contributions) in each year you’re carrying allowance from. Because the annual allowance has been £60,000 since the 2023/24 tax year, the three carry-forward years available for 2026/27 (2023/24, 2024/25, 2025/26) all carry the same £60,000 figure.

A quick worked example

If you contributed £15,000 a year in each of the last three tax years, you’d have £45,000 of unused allowance per year (£60,000 − £15,000), giving £135,000 of carried-forward headroom, plus this year’s £60,000 - a potential total contribution of up to £195,000 in the current tax year alone, subject to the rules below.

The limits that still apply

• Personal contributions are capped at 100% of your UK relevant earnings for the year you’re contributing in - carry forward doesn’t override this cap for money coming from your own pay (it applies less restrictively to employer contributions).
• High earners may have a tapered annual allowance in the years being carried from, which reduces how much unused allowance was actually available in that year in the first place.
• You must use this year’s allowance first, then the oldest of the three carry-forward years before later ones.

Why timing matters

Carry forward allowance from a given tax year drops out of scope once more than three tax years have passed. Practically, this means unused allowance from 2022/23 stopped being usable after 5 April 2026, and 2023/24’s unused allowance will stop being usable after 5 April 2027 - so if you’re planning a large contribution, check which years are still in scope before assuming the oldest one is still available.

Who this most commonly helps

• Anyone with a bonus or one-off windfall this tax year wanting to shelter more of it from Income Tax.
• Self-employed people with a strong year following quieter ones.
• Business owners deciding how much their company should contribute directly to their pension, particularly toward the end of a financial year.

This is a different kind of decision from the steady habit of nudging up your contribution percentage after a pay rise - carry forward is more about occasional large contributions than gradual increases.

The bottom line

If you’ve had a strong income year and haven’t used your full £60,000 annual allowance in the past three tax years, carry forward can meaningfully increase how much you can contribute tax-efficiently right now - but check your scheme membership history and earnings cap before assuming the full figure applies, and see our companion article in the ISA & SIPP series for a more detailed worked example.