UK tapered annual allowance and pension carry forward — 2026/27

By GrowThenDraw Editorial Team · Updated August 11, 2026 · 8 min read · Editorial policy

Carry forward can let pension input exceed this year's annual allowance without automatically creating an annual allowance charge. It does not create a new contribution allowance, and it does not carry forward unused income-tax relief. The distinction is the source of many expensive mistakes.

For 2026/27, start with the allowance that applies now, then look back to 2023/24, 2024/25 and 2025/26. Use provider pension-input figures and the allowance that actually applied in each year—not a remembered contribution amount or an assumed £60,000.

The 2026/27 annual allowance

The standard annual allowance is £60,000. It covers pension input across registered schemes, including employer and employee defined-contribution input and the pension input amount calculated for defined-benefit arrangements.

For a relief-at-source personal pension, use the gross amount after basic-rate relief. An £8,000 payment that the provider grosses up to £10,000 counts as £10,000, not £8,000.

The three carry-forward years

Unused allowance may normally be carried from the three previous tax years. To use a source year's allowance, the individual must generally have been a member of a registered pension scheme at some point in that year. Contributions were not required: active, deferred and pensioner membership can count.

Unused allowance is the amount by which the allowance that applied exceeded pension input for that year, after allowing for carry forward already used in a later prior year. A tapered allowance or alternative allowance must replace the standard figure where relevant.

• 2023/24 is the oldest source year for a 2026/27 calculation.
• 2024/25 is used only after current allowance and eligible 2023/24 room.
• 2025/26 is used last.
• Unused 2023/24 room that remains after 5 April 2027 normally falls out of the three-year window.

The order is fixed

HMRC uses current-year allowance first. If pension input is still above it, carry forward is consumed from the earliest eligible source year first. A person cannot preserve 2023/24 room by choosing to use 2025/26 room instead.

Prior use matters. If pension input in 2024/25 or 2025/26 exceeded the allowance for that year, it may already have consumed some older carry forward. Record that use before calculating what remains for 2026/27.

How the tapered annual allowance changes the result

For 2026/27, taper can apply only if threshold income is above £200,000 and adjusted income is above £260,000. When both tests are met, the £60,000 allowance falls by £1 for every £2 of adjusted income above £260,000, to a £10,000 minimum.

These are technical income definitions. Adjusted income broadly brings pension input back into the calculation, while threshold income has separate adjustments. Salary alone is not a safe proxy near the boundary.

MPAA: carry forward cannot enlarge the £10,000 limit

Taking taxable flexible pension income can trigger the Money Purchase Annual Allowance. For 2026/27 the MPAA is £10,000. Carry forward cannot cover money-purchase input above that amount.

Other pension input is tested against an alternative annual allowance—normally the annual allowance less the MPAA—plus eligible carry forward. That split is why an MPAA calculation needs separate money-purchase and other pension-input figures.

The relevant-earnings limit is a different test

Carry forward increases annual-allowance capacity; it does not carry unused personal-contribution tax relief between years. For most UK residents under 75, gross personal contributions that receive relief are limited to the higher of £3,600 and relevant UK earnings for the current tax year.

Employer contributions are not capped by the member's earnings in the same way, although they still count toward annual allowance and must meet other tax rules. A large contribution plan should therefore show annual allowance and personal tax-relief capacity separately.

A worked 2026/27 example

Assume £30,000 of pension input has already been made in 2026/27 and £35,000 more is planned. The standard current allowance leaves £30,000 before the plan. The first £30,000 planned uses current-year room; the final £5,000 uses the oldest eligible carry forward.

If the available carry forward is £40,000 from 2023/24, £15,000 from 2024/25 and £5,000 from 2025/26, the plan uses £5,000 from 2023/24 and leaves £35,000 of that oldest source at risk of expiring. Total remaining annual-allowance capacity after the plan is £55,000.

Records to collect before acting

• Pension input statements for every scheme and every relevant year.
• The allowance that actually applied in each year, including taper or MPAA adjustments.
• Scheme membership evidence for each source year.
• Any older carry forward already used by pension input in a later prior year.
• Relevant UK earnings and gross personal contributions for the current-year relief test.
• Professional advice where an excess, Scheme Pays, hybrid scheme or income-definition question remains.