Carry forward is a rule that allows you to make pension contributions above the standard annual allowance (currently £60,000 for the 2023/24 tax year) by using unused allowance from the previous three tax years. It’s particularly useful for those who want to make larger contributions in a single year while still receiving tax relief.
To use carry forward:
You must first fully use your current year’s annual allowance.
You must have been a member of a UK-registered pension scheme in the years from which you are carrying forward.
You can only contribute up to 100% of your earnings for the current tax year, regardless of how much you want to carry forward.
Please make sure to register the extra contributions properly in your self-assessment tax return form to avoid extra fees or charges. In case you need help with that, we would suggest contacting a certified financial advisor.
Restrictions
You can’t use carry forward if your Money Purchase Annual Allowance (MPAA) has been triggered.
Carry forward applies only to unused annual allowances, not to tax-free lump sums or lifetime allowances.