What you need to know: Pension carry-forward + tapered allowance stack
Quick answer: Carry-forward lets you use unused pension annual allowance from the three preceding tax years (2023/24, 2024/25, 2025/26) in the current 2026/27 tax year. The maximum theoretical contribution: £240,000 (£60k current year + 3 × £60k prior years). To use carry-forward, you must have been a member of a registered pension scheme in…
Key points:
- You must have been a member of a UK-registered pension scheme during each tax year you're carrying forward from.
- Carry-forward is from the three preceding tax years (so in 2026/27: from 2023/24, 2024/25, and 2025/26).
- You must use the current year's allowance first, then carry-forward starting with the earliest year.
Carry-forward lets you use unused pension annual allowance from the three preceding tax years (2023/24, 2024/25, 2025/26) in the current 2026/27 tax year. The maximum theoretical contribution: £240,000 (£60k current year + 3 × £60k prior years). To use carry-forward, you must have been a member of a registered pension scheme in each of the years you're carrying forward from, AND you can only contribute up to 100% of your relevant earnings in the current year. The tapered annual allowance complicates things for earners with adjusted income over £260,000.
The basic rules
Carry-forward applies to pension contributions made in the current tax year. To qualify:
- You must have been a member of a UK-registered pension scheme during each tax year you're carrying forward from.
- Carry-forward is from the three preceding tax years (so in 2026/27: from 2023/24, 2024/25, and 2025/26).
- You must use the current year's allowance first, then carry-forward starting with the earliest year.
- Total contributions can't exceed 100% of your relevant earnings in the current tax year (limits the absolute amount).
The £240k theoretical maximum — worked example
Earner with £250k income in 2026/27, never contributed to pension before
| 2023/24 unused allowance | £60,000 |
| 2024/25 unused allowance | £60,000 |
| 2025/26 unused allowance | £60,000 |
| 2026/27 current year allowance | £60,000 |
| Total available | £240,000 |
Catch: must be a pension scheme member in 2023/24, 2024/25, 2025/26. If they only opened a pension on 1 January 2026, they cannot carry forward from those years — only from when they were a member onwards.
Solution: open a pension with £1 immediately (even basic SIPP) — this triggers membership and protects future carry-forward capacity.
The tapered annual allowance
For high earners, the annual allowance tapers down. The taper rule:
- If your "threshold income" (broadly your net income before personal pension contributions) is ≤ £200,000, no taper. You have the full £60,000.
- If both threshold income > £200,000 AND "adjusted income" (broadly your total income including ALL pension contributions) > £260,000, the allowance tapers down by £1 for every £2 of excess adjusted income above £260,000.
- The minimum allowance after taper is £10,000 (reached at adjusted income of £360,000).
This means a senior executive with £260k of salary, no other income, and the full £60k auto-enrolment + salary sacrifice + employer pension contributions of £40k has adjusted income £300k — so taper reduces allowance from £60k to £40k.
The taper × carry-forward interaction
Each tax year has its own taper status. If your taper was different in past years, the carry-forward capacity per year reflects that year's tapered allowance — not the current year's.
| Year | Adjusted income | Tapered allowance | Used | Available carry-forward |
|---|---|---|---|---|
| 2023/24 | £280,000 | £50,000 | £8,000 | £42,000 |
| 2024/25 | £250,000 | £60,000 (no taper) | £8,000 | £52,000 |
| 2025/26 | £300,000 | £40,000 | £8,000 | £32,000 |
| 2026/27 | £280,000 | £50,000 | (planning) | — |
In 2026/27, the carry-forward available is £42k + £52k + £32k = £126k from prior years, plus the current year's £50k = total possible contribution £176,000 (subject to having that much relevant earnings).
The order rules
HMRC requires carry-forward to be used in a specific order:
- Use the current year's allowance first (in our example: £50k of 2026/27).
- Then earliest unused year (2023/24).
- Then next (2024/25).
- Then most recent prior year (2025/26).
This matters because contributing £150k in 2026/27 doesn't just use "the carry-forward" — it uses (a) the full 2026/27 allowance and (b) parts of multiple prior years in order. Each year's allocation must be tracked.
Why this matters for high earners
The taper is the most aggressive UK tax provision for senior professionals. At adjusted income £360k+, the annual allowance is just £10,000. Without carry-forward, this would dramatically limit pension wealth-building.
Carry-forward provides three years of "rescue" capacity. For someone whose income spikes in one year (a bonus, a one-off equity event, an RSU vesting), carry-forward lets them defer pension contributions and make them all in one go.
Typical use case: City lawyer / partner with steady £200k income usually contributing £40k/year. Year 5: receives £500k equity exit. Adjusted income spikes to £700k. Allowance tapers to £10k. But they have ~£100k of carry-forward from prior years (where they only used £40k of £60k available). Total contribution capacity in the spike year: £10k + £100k = £110k.
Common mistakes
- Not being a pension scheme member in prior years. Carry-forward requires membership in each year you carry from.
- Not tracking the taper status in past years. If you were tapered in 2024/25 but think you had £60k, you'll over-contribute and trigger an annual allowance charge.
- Exceeding 100% of relevant earnings. Even with carry-forward, total contributions can't exceed your gross taxable earnings in the current year.
- Forgetting employer contributions. Carry-forward applies to total contributions (employer + employee). If employer puts in £30k, that uses £30k of allowance.
- Confusing "threshold income" with "adjusted income". They're different. Threshold is your net income before personal pension contributions; adjusted income includes all pension contributions plus your other income.
Sources and methodology
Carry-forward and tapered annual allowance rules follow sections 228–238 of the Finance Act 2004 (as amended) and HMRC's annual allowance guidance. For high-income cases with complex income mix (equity, partnership profits, rental), see the tax adviser recommendation. The methodology page documents sources.
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