If you haven’t used your full pension annual allowance in recent years, you may be able to carry forward unused allowance and make a much larger pension contribution now.
This can be particularly useful for limited company directors. Your company might have accumulated surplus cash, or you may have delayed making pension contributions while building the business.
For 2026/27, the standard pension annual allowance is £60,000. But carry forward can potentially allow you to contribute significantly more without facing an annual allowance tax charge.
Carry forward allows you to use unused pension annual allowance from the previous three tax years.
For the 2026/27 tax year, this means you may be able to use unused allowance from:
This is in addition to your available annual allowance for 2026/27.
So, if you haven’t made large pension contributions in recent years, your available allowance could be considerably higher than £60,000.
You can check the official rules in HMRC’s pension annual allowance guidance.
You need to look at how much annual allowance you had available in each of the previous three tax years and how much pension saving you actually made.
The standard annual allowance was £60,000 in each of 2023/24, 2024/25 and 2025/26.
In this example, you have £90,000 of unused annual allowance from the previous three years.
Add the standard £60,000 annual allowance for 2026/27 and you could potentially have £150,000 of annual allowance available.
That doesn’t automatically mean you should contribute £150,000. Other pension and company tax rules still need to be considered.
No. You don’t need to have made pension contributions during a previous year to carry forward unused allowance from that year.
However, you must have been a member of a registered pension scheme at some point during the tax year you want to carry forward from.
This could include being an active, deferred or pensioner member of a registered pension scheme.
For example, if you had an old workplace pension but made no contributions to it during 2023/24, you may still be able to carry forward unused annual allowance from that year.
If you weren’t a member of a registered pension scheme at all during that tax year, you normally can’t carry forward its unused allowance.
You use your current tax year’s annual allowance first.
If your pension saving exceeds that amount, you then use unused allowance from the previous three tax years, starting with the earliest year first.
For a contribution made in 2026/27, the normal order is therefore:
This matters because unused allowance disappears once it falls outside the three-year carry-forward period.
Carry forward belongs to you as the pension scheme member, rather than to your limited company.
However, your company can make an employer pension contribution that uses your available annual allowance and carried-forward allowance.
This is particularly useful for directors because employer pension contributions aren’t restricted by your relevant UK earnings in the same way as tax relief on personal pension contributions.
For example, taking a £12,570 salary doesn’t necessarily prevent your company from making a £60,000, £80,000 or larger employer pension contribution if you have sufficient annual allowance available.
Read our guide to company vs personal pension contributions for more on this distinction.
Not where your limited company is making the contribution.
The relevant earnings restriction applies to tax relief on your own personal pension contributions. Employer contributions aren’t restricted by your salary in the same way.
This distinction is particularly important for company directors who take a relatively small salary and receive the rest of their income as dividends.
Dividends aren’t relevant UK earnings for personal pension tax relief.
So a director with a low salary may have limited scope for large tax-relieved personal contributions, while their company may be able to make a much larger employer contribution.
For more information, read our full guide to paying into a pension from your limited company.
Carry forward determines how much pension saving you can potentially make without an annual allowance tax charge.
Whether your limited company receives Corporation Tax relief on an employer contribution is a separate question.
Employer pension contributions can normally be deducted when calculating company profits if they meet HMRC’s wholly and exclusively test.
For a director, HMRC considers the overall remuneration package and whether the payment has been made for the purposes of the company’s trade.
So having £100,000 of available pension allowance doesn’t automatically mean that a £100,000 company contribution will qualify for Corporation Tax relief.
You can read HMRC’s guidance on employer pension contributions in BIM46035.
High earners can have an annual allowance below the standard £60,000.
For 2026/27, the tapered annual allowance can apply where both:
The annual allowance is reduced by £1 for every £2 of adjusted income above £260,000, subject to a minimum tapered annual allowance of £10,000.
If the taper applied to you in one of the previous three tax years, you need to calculate the unused allowance for that year using the annual allowance that actually applied to you, rather than simply assuming you had £60,000 available.
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