Pension Carry Forward: £180,000 of Tax Relief Expires on 5 April — Here's How to Claim It

The pension annual allowance is £60,000 for the 2025/26 tax year — the same as 2024/25 and 2023/24. Before that, in 2022/23, it was £40,000.

Carry forward lets you use any unused allowance from the previous three tax years, provided you were a member of a registered pension scheme during those years. You must use the current year's allowance first, then carry forward in chronological order — earliest unused year first.

Here's what matters right now:

• 2022/23: £40,000 allowance — expires after 5 April 2026
• 2023/24: £60,000 allowance — available until 5 April 2027
• 2024/25: £60,000 allowance — available until 5 April 2028
• 2025/26: £60,000 allowance — current year

The maximum you could theoretically contribute before 5 April 2026, using all four years, is £220,000. But there's a catch: your total contributions in any tax year cannot exceed 100% of your UK earnings for that year. A salary of £85,000 means £85,000 is your ceiling for the current year's contributions, regardless of how much unused allowance you're carrying.

For a broader look at how pension allowances fit into your overall tax-year-end strategy, see our pensions hub — or compare this with ISA allowances if you're choosing between the two wrappers.

After 5 April 2026, the 2022/23 tax year drops out of the carry forward window. If you had £40,000 of unused allowance from that year, it vanishes permanently.

Consider a higher-rate taxpayer earning £90,000 who contributed the auto-enrolment minimum (8% of qualifying earnings, split between employer and employee) for the past four years. Their annual pension contributions might total £5,500–£7,000 per year. That leaves roughly £33,000–£34,500 of unused allowance from 2022/23 alone, and substantially more from the subsequent years when the allowance jumped to £60,000.

At 40% tax relief, recovering that £33,000 of 2022/23 unused space is worth £13,200 in tax savings. Wait until after 5 April? That money is gone forever.

For additional-rate taxpayers on 45%, the numbers are even more compelling. Every £10,000 of carry forward used returns £4,500 in tax relief.

Compare this with the alternative: putting that £33,000 into a cash ISA at 4%. You'd earn roughly £1,320 in tax-free interest per year. Generous — but pension tax relief gives you £13,200 upfront. The pension wins by a factor of ten in year one alone. Our recent debate on pensions vs ISAs breaks down the full comparison.

Carry forward isn't just for the wealthy, though they gain the most from it. Three groups should be paying attention right now:

Higher and additional-rate taxpayers getting 40% or 45% relief. If you received a bonus, sold a business, or had a particularly good year, a large pension contribution can pull your effective tax rate down dramatically. Someone earning £125,140 or more who has lost their personal allowance entirely gets 60% effective relief on pension contributions that bring income back below that threshold.

Self-employed workers with lumpy income. A freelancer who earned £30,000 in 2022/23 but £80,000 in 2025/26 can make a large contribution now, using the current year's higher earnings as the ceiling. The HMRC guidance on carry forward confirms that your earnings limit applies to the year of contribution, not the year the allowance originated.

Anyone who started a workplace pension recently. If you joined a scheme mid-way through previous tax years, you'll have partial unused allowances from each year. Even modest carry forward — say £15,000–£20,000 — delivers meaningful tax relief at basic rate.

For the self-employed, the pension carry forward story intersects with another under-used tool: salary sacrifice. If you're operating through a limited company, employer contributions don't count against the earnings ceiling — they only count against the annual allowance. This creates additional headroom. Our tax planning hub covers the full range of allowances worth checking before April.

High earners face an extra complication. If your adjusted income exceeds £260,000, your annual allowance tapers down — by £1 for every £2 above that threshold — to a minimum of £10,000.

The taper applies to the current year only, not to carried-forward allowances. So if your 2023/24 allowance was the full £60,000 (because your income was below the threshold that year) but your 2025/26 income now triggers tapering, you can still carry forward the £60,000 from 2023/24. You'd just be limited to £10,000 for the current year.

This creates a planning opportunity. If you know a high-income year is coming — a large bonus, the sale of shares, a contract payout — you might deliberately under-contribute in lower-income years to bank carry forward for when the tax relief is worth most.

Mistake 1: Assuming your employer handles it. Workplace pensions auto-enrol you at the minimum contribution rate. They don't monitor your unused allowance or suggest carry forward. That's your job — or your financial adviser's.

Mistake 2: Forgetting the earnings test. A retired person with no UK earnings cannot contribute more than £3,600 gross (£2,880 net) to a pension, regardless of unused carry forward. The 100% earnings rule is absolute. If you stopped working mid-year, your earnings for 2025/26 are whatever you earned before stopping — not your previous year's salary.

Mistake 3: Missing the pension membership condition. You needed to be a member of a registered pension scheme during each year you want to carry forward from. If you had a gap in membership — perhaps between jobs — that year's unused allowance is lost. Check your pension annual statements to confirm membership dates.

Higher earners also risk triggering the tapered annual allowance without realising it. A one-off bonus or share vesting event can push adjusted income above £260,000, slashing the current year's allowance to as little as £10,000. Run the numbers before contributing — the SIPP pension calculator can help model different contribution scenarios.

You have 18 days. Here's the practical sequence:

Step 1: Calculate your unused allowance. Check your pension annual statements for 2022/23, 2023/24, and 2024/25. Subtract total contributions (yours plus employer's) from the annual allowance for each year. The MoneyHelper carry forward calculator can help.

Step 2: Confirm your earnings ceiling. Your 2025/26 contributions cannot exceed 100% of your UK earnings this tax year. If you're employed, your P60 or latest payslip gives you the number. Self-employed? Use your estimated profit for the year.

Step 3: Choose your vehicle. You can contribute to a SIPP, a workplace pension, or both. SIPPs give you full control over timing. Workplace pensions may offer employer matching — check whether additional voluntary contributions (AVCs) trigger extra employer top-ups.

Step 4: Make the contribution. For tax relief to apply in 2025/26, the money must leave your account before 5 April 2026. SIPP providers typically need 3–5 working days to process contributions. With Easter falling in mid-April this year, the real deadline for bank transfers is around 28–31 March to be safe.

Step 5: Claim higher-rate relief. If you're a higher or additional-rate taxpayer, the pension provider claims the basic 20% relief automatically. You claim the rest via your Self Assessment tax return — or by calling HMRC to adjust your tax code.

This article is for informational purposes only and does not constitute financial advice. You should seek independent financial advice before making any investment decisions.