Carry Forward
A pension allowance rule that lets you use any unused Annual Allowance from the previous three tax years, potentially allowing contributions well above the current year's £60,000 limit. To use carry forward you must have been a member of a registered pension scheme in each year you wish to carry forward from, and you must use the current year's Annual Allowance in full first. This can be particularly useful for people who receive large bonuses or windfalls.
How it works
Carry forward lets you use unused Annual Allowance from the three previous tax years, but only if you were a member of a registered pension scheme in each of the years you want to draw allowance from — even if you made no contributions in that year, scheme membership itself is enough to qualify. You must first use up the current tax year's full £60,000 Annual Allowance before any carried-forward allowance from earlier years can be applied.
When drawing on carried-forward allowance, HMRC requires you to use the earliest available year first, working forward chronologically, rather than letting you choose which year's unused allowance to draw on. If you were subject to the Tapered Annual Allowance in an earlier year because your income was high that year, it is the tapered figure for that year — not the standard £60,000 — that is available to carry forward.
This rule is especially useful for people who receive a one-off windfall such as a large bonus, an inheritance they want to shelter through pension contributions, or a year of unusually high self-employment profits, since it can allow a much larger single-year contribution than the standard Annual Allowance would otherwise permit. You report the calculation through Self Assessment or by working with a pension provider or adviser to confirm the correct figures.
Example: carrying forward unused allowance
Suppose you had £20,000 of unused Annual Allowance in each of the previous three tax years, having been a pension scheme member throughout — £60,000 of unused allowance in total.
Combined with this year's full £60,000 Annual Allowance, you could contribute up to £120,000 into your pension this year and still receive tax relief on the whole amount.
Frequently asked questions
Do I need to have contributed to a pension in previous years to carry forward allowance?
No, you just need to have been a member of a registered pension scheme in each year you carry forward from — you did not need to have made contributions in that year.
Which year's unused allowance do I use first when carrying forward?
The earliest of the three previous tax years must be used first, working forward chronologically, and only after the current year's full allowance has been used up.
Does carry forward apply to ISAs as well as pensions?
No. Carry forward is a pension-specific rule for the Annual Allowance; unused ISA allowance simply expires at the end of the tax year with no carry-forward option.
Related Terms
Annual Allowance
The maximum amount you can contribute to registered pension schemes each tax year while still receiving tax relief, currently set at £60,000.
Tapered Annual Allowance
A reduced Annual Allowance for individuals whose adjusted income exceeds £260,000, with the allowance reduced by £1 for every £2 of income above that threshold.
Pension Tax Relief
A government top-up on pension contributions that effectively returns income tax paid on the contributed amount, making pensions a highly tax-efficient saving vehicle.
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