Pension carry forward rule

The maximum amount you can contribute to a pension and benefit from tax relief is limited by the annual allowance of £40,000 (2014/15) or your earnings if lower.

However, if you have sufficient earnings it is possible to carry forward any unused pension annual allowance from each of the past three years.

Since the annual allowance in the last 3 tax years has been £50,000 (2011/12, 2012/13, 2013/14), it is possible to contribute up to £190,000 into a pension and benefit from tax relief of up to £85,500 based on 45% additional tax.

To be able to carry forward unused pension annual allowance, you must have earnings in the current year of at least the amount you are contributing to the pension arrangement. In addition, you must have had a pension in each of the years from which you are carrying forward, irrespective of whether you made any pension contributions.

[This article is for information only and does not constitute advice. If you would like advice, please get in touch on 01392 875500 or]

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