Quick Summary
What it is: The ability to use unused pension annual allowance from the previous three tax years on top of your current year allowance
Maximum available in 2025/26: Up to £220,000 if you made no contributions in 2022/23, 2023/24, or 2024/25
Key condition: You must have been a member of a registered pension scheme in each year you want to carry forward from
Earnings cap: Your personal contributions cannot exceed 100% of your relevant UK earnings (salary, wages, bonuses, commission, or self-employed trading profits) in the current tax year
MPAA interaction: Carry forward cannot be used to increase the £10,000 MPAA limit for defined contribution pensions
Taper interaction: Carry forward from years when the taper applied is based on your reduced allowance for that year, not £60,000
No HMRC notification needed: Simply make the contribution and keep accurate records of your pension input amounts
The pension annual allowance limits how much you can contribute to your pension each tax year and still receive tax relief.
For 2025/26, the standard limit is £60,000. But there is a lesser-known rule that allows many savers to go significantly above that figure by using annual allowances they did not fully use in previous years.
This is called pension carry forward. It is one of the most powerful and underused planning tools in the pension system, particularly for people in their 50s and early 60s who want to make a substantial lump sum contribution before they retire, whether from a bonus, an inheritance, a business sale, or simply because their financial situation has improved.
This guide explains exactly how pension carry forward works, what you need to qualify, how the ordering rules apply, and what changes if you are subject to the tapered annual allowance or have already triggered the Money Purchase Annual Allowance (MPAA).
What is pension carry forward?
Pension carry forward is one of the most powerful and underused planning tools available to UK pension savers. It allows you to use any unused annual allowance from the previous three tax years, on top of your current year allowance, to make a larger contribution in a single tax year.
The pension carry-forward rules were designed for people who could not make full use of their allowance in earlier years, perhaps because of variable income, mortgage commitments, or simply because they were unaware of the rules at the time. Carry forward gives you the opportunity to make a catch-up contribution later, and it can be particularly valuable for people approaching retirement who want to make a substantial lump sum payment from a bonus, an inheritance, a business sale, or an improved financial position.
For 2025/26, the three previous years you can draw pension carry forward from are:
- 2022/23, when the annual allowance was £40,000
- 2023/24, when the annual allowance increased to £60,000
- 2024/25, when the annual allowance remained at £60,000
Important: the 2022/23 allowance was £40,000, not £60,000
The annual allowance increased from £40,000 to £60,000 on 6 April 2023. Using the wrong figure for 2022/23 is a common mistake that could lead you to overestimate your available carry forward and face an unexpected annual allowance charge from HMRC.
There is no formal process for using pension carry forward. You do not notify HMRC in advance or make a special declaration on your tax return. You simply make the contribution and keep clear records. Accurate record-keeping is essential: if HMRC ever questions a large contribution, you will need to demonstrate that your combined allowance was not exceeded.
Are you eligible to use pension carry forward?
Two conditions must both be met before you can use pension carry forward.
Condition 1: registered pension scheme membership
You must have been a member of a registered pension scheme in each tax year from which you want to carry forward unused allowance.
HMRC defines membership broadly. It includes active members who are still contributing, deferred members with a preserved pot from a former employer, and pensioner members who are already drawing from the scheme.
Simply having an old workplace pension sitting dormant counts, even if nothing has been paid in for years.
If you had a gap year where you held no pension at all, you cannot carry forward allowance from that specific year.
Condition 2: sufficient relevant UK earnings in the current year
Where you are making personal contributions, your total gross personal contributions in 2025/26 cannot exceed 100% of your relevant UK earnings this year.
If you want to contribute £150,000, you need earnings of at least £150,000.
Relevant UK earnings include salary, wages, bonuses, commission, and self-employed trading profits. They do not include investment income, rental income, or most non-cash benefits provided by an employer (benefits in kind), even though these may still be taxable.
2025/26 change: furnished holiday lettings income no longer qualifies
The Furnished Holiday Lettings (FHL) regime was abolished from 6 April 2025. Prior to this date, FHL profits counted as relevant UK earnings for pension purposes. From the 2025/26 tax year onwards, income from furnished holiday lettings is treated as ordinary property income and no longer qualifies as relevant UK earnings when calculating your maximum pension contribution.
Employer contributions are not limited by your personal earnings and can be made regardless of how much you earn.
However, for corporation tax relief purposes, employer contributions must meet HMRC’s wholly and exclusively for business purposes requirement.
In practice this test is met in the vast majority of cases; it is most relevant for controlling directors or employees who are connected to the business owner, where HMRC may review whether the overall remuneration package is commercially reasonable.
How pension tax relief works
Pension contributions are typically made net of basic rate tax.
For example, a £100 gross contribution costs you £80; the pension scheme claims the remaining £20 directly from HMRC and adds it to your pot automatically.
Higher rate taxpayers can reclaim additional tax relief through their self-assessment tax return, bringing the effective cost of a £100 gross contribution down to £60.
Additional rate taxpayers can reclaim even further, reducing the effective cost to £55.
How much pension carry forward is available in 2025/26?
The amount available depends on how much of each previous year’s allowance you already used. The table below shows the maximum possible, based on someone who made no pension contributions in the previous three years.
| Tax year | Annual allowance | Max carry forward if fully unused |
|---|---|---|
| 2022/23 | £40,000 | £40,000 |
| 2023/24 | £60,000 | £60,000 |
| 2024/25 | £60,000 | £60,000 |
| 2025/26 (current year) | £60,000 | £60,000 |
| Maximum total | £220,000 |
The ordering rules: which year's allowance is used first?
Pension carry forward must be applied in a fixed order. You cannot choose which year’s unused allowance to use first. The rules are:
Your current year’s annual allowance (£60,000 for 2025/26) must be used first. Once that is exhausted, carry forward from 2022/23 is applied next, then any remaining from 2023/24, then any remaining from 2024/25.
This ordering matters because the annual allowance was lower in 2022/23. Starting with the earliest year means you work through the smallest pot first before moving to the larger allowances from more recent years.
Worked example: how pension carry forward works in practice
James is 58, a self-employed consultant earning £130,000 in 2025/26. He has been a member of his SIPP since 2014 but his contributions have been modest while he was paying off his mortgage. Now the mortgage is cleared, he wants to make a large one-off contribution.
| Tax year | Annual allowance | Contributions made | Unused allowance |
|---|---|---|---|
| 2022/23 | £40,000 | £9,000 | £31,000 |
| 2023/24 | £60,000 | £14,000 | £46,000 |
| 2024/25 | £60,000 | £14,000 | £46,000 |
| 2025/26 | £60,000 | £0 so far | £60,000 |
| Total available | £183,000 |
James’s total available carry-forward allowance is £183,000. However, his personal contributions are capped at 100% of his earnings: £130,000.
He pays £104,000 net into his SIPP. The pension scheme claims £26,000 of basic rate relief from HMRC, resulting in a gross contribution of £130,000. As a higher-rate taxpayer, James reclaims an additional £26,000 through his self-assessment return. His total tax relief is £52,000, leaving an effective out-of-pocket cost of around £78,000.
The ordering works as follows: £60,000 uses the 2025/26 current year allowance first; £31,000 uses all of the 2022/23 carry forward; £39,000 uses part of the 2023/24 carry forward. Total: £130,000. James stays comfortably within his combined limit with £7,000 of 2023/24 and £46,000 of 2024/25 carry forward remaining unused.
Key takeaway from James’s example
Even though James had £183,000 of combined allowance available, his earnings cap of £130,000 was the binding constraint. Carry forward gives you the headroom; your earnings determine how much of it you can actually use in a single year.
How pension carry forward interacts with the tapered annual allowance
If you are a high earner subject to the tapered annual allowance, you can still use pension carry forward, but with a critical difference: your carry forward from any year when the taper applied is based on your reduced (tapered) allowance for that year, not the standard £60,000.
As a reminder, the tapered annual allowance reduces the standard £60,000 limit where your threshold income exceeds £200,000, and your adjusted income exceeds £260,000. For every £2 of adjusted income above £260,000, the annual allowance reduces by £1. The minimum floor is £10,000. For full detail, see our pension annual allowance guide.
Worked example: pension carry forward with the tapered allowance
Sarah is a senior professional. Here is her position across the four relevant years.
| Tax year | Tapered allowance | Contributions made | Unused allowance |
|---|---|---|---|
| 2022/23 | £10,000 (at floor) | £9,000 | £1,000 |
| 2023/24 | £35,000 | £10,000 | £25,000 |
| 2024/25 | £60,000 | £60,000 | £0 |
| 2025/26 | £50,000 (tapered) | £0 so far | £50,000 |
| Total available | £76,000 |
Sarah’s total available for 2025/26 is £76,000: far below the £220,000 available to someone unaffected by the taper. High earners subject to the taper in previous years will often find their carry forward is very limited, particularly in years when they were at the £10,000 floor.
Warning: do not substitute the standard £60,000 for a tapered year
If the taper applied in a previous year, your carry forward from that year is the unused portion of your tapered allowance for that year. You cannot substitute the standard £60,000 figure. Getting this wrong is one of the most common errors in carry forward planning for high earners and could result in an annual allowance tax charge.
How pension carry forward interacts with the MPAA
If you have triggered the Money Purchase Annual Allowance (MPAA), the pension carry forward rules change significantly. The MPAA is typically triggered when you take taxable income from a pension: for example, taking income payments from a flexi-access drawdown pot. It is not triggered by taking only your 25% tax-free lump sum. Once triggered, your annual allowance for defined contribution pension savings drops permanently to £10,000 per year.
Critical rule: carry forward cannot increase the £10,000 MPAA
The £10,000 MPAA is a hard cap for defined contribution pension savings, regardless of how much unused allowance you have accumulated in previous years. Even if you have ten years of untouched allowance, none of it can be used to go above £10,000 for your money purchase pension.
Pension carry forward: frequently asked questions
Q: Can I use carry forward if I have no earnings this year?
Personal contributions require relevant UK earnings. If you have no earnings, your personal contributions are limited to £3,600 gross per year regardless of carry forward. However, employer contributions are not limited by your earnings, so if an employer is contributing, carry forward may still apply to those contributions.
Q: Do I need to tell HMRC I am using pension carry forward?
No formal notification or claim is required. There is no box on your self-assessment return for carry forward unless you have breached the annual allowance. Simply keep records of your contributions and the unused allowances from each year so you can demonstrate your calculations if ever asked.
Q: What if I do not know how much I contributed in previous years?
Contact your pension providers and ask for your pension input amounts for 2022/23, 2023/24, and 2024/25. For defined benefit schemes, write to the scheme directly and ask them to confirm your pension input amount for each year in writing. Allow several weeks for responses, particularly from defined benefit schemes.
Q: Can I carry forward from 2021/22 or earlier?
No. Pension carry forward is limited to the three immediately preceding tax years. In 2025/26, that means 2022/23, 2023/24, and 2024/25 only. Any unused allowance from 2021/22 or earlier has permanently lapsed and cannot be recovered.
Q: What happens if I accidentally exceed my combined carry forward limit?
Exceeding the annual allowance results in an annual allowance charge from HMRC, which claws back the tax relief on the excess. It is added to your income for the year and taxed at your marginal rate, declared via self-assessment. In some cases, your pension scheme can pay the charge on your behalf through the scheme pays mechanism, reducing your pot rather than requiring a cash payment.
Q: Does pension carry forward apply to ISAs or Lifetime ISAs?
No. Carry forward is a pension-specific rule. It does not apply to ISAs, Lifetime ISAs, or any other savings product. The annual ISA allowance of £20,000 for 2025/26 does not carry over if unused. For more on the difference between pensions and ISAs, see our pension vs ISA guide.
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