Pension Carry Forward 2026/27 — Rules & Calculations

Pension carry forward is the mechanism that lets you contribute more than the £60,000 annual allowance in 2026/27 by drawing on unused allowance from the previous three tax years — 2023/24, 2024/25 and 2025/26. The arithmetic is strict: the current year's allowance is used first, then unused amounts are drawn from the earliest year first, and only years in which you were a scheme member can contribute headroom. In theory a taxpayer who used nothing in the three prior years can fund up to £240,000 this year. Model your own headroom with the Pension Carry Forward Calculator→.

This guide focuses on the mechanism and the numbers — the rolling window, the ordering rules, how taper and the MPAA change the calculation, and fully worked examples with tax charges.

The Rolling Window and the Formula

The formula for each year is simple: unused allowance = that year's allowance − total pension input in that year. Inputs include your own contributions, employer contributions and any third-party payments — not just the cash you personally put in. The window is rolling: on 6 April 2027 the 2023/24 slice expires, so delaying a large contribution until May 2027 costs you a whole year of headroom. The years carried from are measured at their own limits — all three prior years have a £60,000 standard allowance, but if 2025/26 was tapered for you, only the tapered headroom carries.

The Ordering Rules and the £240,000 Ceiling

• Current year first: you must exhaust the 2026/27 £60,000 allowance before any carried-forward headroom can be used. Contributions count regardless of when in the year they are made — a payment on 30 March uses the full window.
• Earliest year first: carried-forward headroom is drawn from 2023/24, then 2024/25, then 2025/26. The oldest allowance expires first, so it is used first.
• The theoretical ceiling: with nothing used in any prior year, capacity is £60,000 (current) + £60,000 × 3 = £240,000. Most people have used some allowance, so the real figure is lower.
• The 100% earnings cap: personal contributions cannot exceed your UK relevant earnings in 2026/27, even with carry forward. Employer contributions are not bound by this limit.
• Membership condition: a year in which you were not a member of a registered pension scheme carries nothing, no matter how small your other contributions were.

How the Taper Interacts with Carry Forward

The taper only applies if threshold income is over £200,000 and adjusted income is over £260,000; the allowance falls by £1 for every £2 of adjusted income above £260,000, with a floor of £10,000. The carried-from years are measured at their own limits: if 2025/26 was tapered to £40,000 and you used £30,000, only £10,000 carries — not the £30,000 a £60,000 limit would imply. The Money Purchase Annual Allowance is £10,000 for 2026/27 and can be triggered by flexible access. Unused annual allowance cannot be used to increase the MPAA for money-purchase contributions; the interaction with non-money-purchase savings must be checked separately rather than described as a blanket end to all carry forward.

The Annual Allowance Charge in Detail

When total pension input exceeds your available allowance — current plus carried forward — an annual allowance charge may arise. The charge is calculated using the applicable tax bands and reported on the Self Assessment return; it is not always a simple single-rate multiplication. Where the statutory conditions are met, including a charge over £2,000 and the relevant pension input amount in that scheme, you can normally ask for scheme pays by 31 July after the year end. The scheme pays the charge in return for an actuarial reduction in benefits. Scheme pays does not remove the reporting duty: you still declare the charge and record the amount paid by the scheme.

Worked Calculations

Example 1 — The £150,000 windfall. Rachel earns £85,000 and has used £30,000 of allowance in each of 2023/24, 2024/25 and 2025/26. She receives a £150,000 bonus in 2026/27. Her capacity is £60,000 (current) + £30,000 + £30,000 + £30,000 = £150,000, which funds the whole bonus into her SIPP. As a 40% taxpayer she receives £30,000 of basic-rate relief at source and claims a further £30,000 through Self Assessment.

Example 2 — The tapered shortfall. Omar has adjusted income of £290,000, giving a 2026/27 allowance of £45,000. In 2025/26 his allowance was £50,000 and he used £40,000, leaving £10,000 to carry. His total capacity is £45,000 + £10,000 = £55,000. If he contributes £60,000, the £5,000 excess is taxed at his marginal rate — 45%, an annual allowance charge of £2,250 payable through Self Assessment.

Example 3 — Employer contributions count. James's employer pays £50,000 into his pension in 2025/26; James adds nothing personally. That year's usage is £50,000, leaving £10,000 to carry into 2026/27. His own contributions in 2026/27 are still capped at 100% of his relevant earnings, but the carried headroom is available to any contributor — so an employer can fund it directly, which is how company owners extract profit into a pension at corporation-tax relief.

Carry Forward for Company Directors

Directors have a route to using carry forward: the company pays employer contributions into the director's pension, deductible against corporation tax at up to 25% and not subject to the 100% of relevant earnings limit that binds personal contributions. A profitable company may therefore fund several years of unused allowance in one go — potentially avoiding dividend tax at the shareholder's applicable rate, which can be 35.75% for a higher-rate dividend in 2026/27. Two cautions apply. The contribution must be wholly and exclusively for the business, backed by a reasonable pensions policy for directors and staff, or HMRC can deny the deduction. And the money must be paid and accepted by the scheme before 5 April to count in the tax year, so the carry-forward calculation should be finalised well before the year end, with board minutes recording the decision and the amounts against the director's available headroom.

Frequently Asked Questions

The annual-allowance schedule should identify employer input separately from personal payments.

Retain provider statements for every pension input period used.

Carry-forward working paper

Prepare a year-by-year schedule of pension input amounts, annual allowance used, employer contributions, personal contributions and the unused balance available from earlier years. The pension input amount may not equal the cash payment leaving the bank. Check the member's status in each relevant year, tapered-allowance rules, salary sacrifice, bonuses and whether the pension arrangement was open as required.

Before making a large contribution, model the effect on taxable income, payments on account, cash reserves and future access. Keep provider statements, the calculation, any protection evidence and the official rules used. Revisit the schedule after a transfer, flexible access, a new employer or a change in the law. A calculator that assumes every contribution is personal can produce the wrong result.

Carry-forward records for pension contributions

Keep a year-by-year schedule of pension input amounts, not just payments leaving the bank. Record the pension arrangement, tax year, contribution type, employer input, annual allowance used and any transitional rule relied on. The relevant figure can differ from the amount personally paid, and the timing of a contribution does not always answer which pension input period it belongs to.

Before using carry forward, check the member's pension status in the earlier years and whether the arrangement remains open for the relevant period. Consider adjusted income, threshold income, tapered allowance, salary sacrifice, bonuses and employer contributions. A contribution that fits within unused allowance can still be unsuitable for cash flow or lifetime tax planning.

Retain provider statements and the calculation used to make the claim. Revisit the schedule after a new employer, a transfer, a flexible-drawdown event or a change in the law. Do not rely on a calculator that silently assumes every input is a personal contribution.

Final checks before using carried-forward allowance

Before making a large contribution, save a separate calculation for each tax year rather than one combined headline number. Record the Annual Allowance that applied in that year, pension input already used, any tapering or MPAA restriction, and the unused amount carried forward in oldest-first order. Ask every scheme for its pension input statement, including defined-benefit input where relevant. A provider’s estimate of a personal payment is not a substitute for the total across all schemes.

The contribution deadline and the allowance calculation are separate tests. A payment allocated to the current tax year can use valid carry forward, but a payment allocated to the following year cannot be moved back merely because the transfer was initiated earlier. Keep the provider receipt, payroll record, contribution date and tax-year allocation with the carry-forward schedule. If the calculation includes a protection, taper or flexible-access event, document the rule and the date that triggered it so the result can be reviewed later.

Work out your exact headroom with the Pension Carry Forward Calculator→, then follow the step-by-step process in the Pension Carry Forward guide and check the taper detail in the Pension Annual Allowance guide.

Official sources

• GOV.UK: Annual Allowance
• GOV.UK: Pension schemes rates and allowances
• GOV.UK: Tax relief on private pension contributions
• GOV.UK: Who must pay the pensions Annual Allowance tax charge