Making the most of your Annual Allowance (AA)

How to pay more into your pension every year – whilst avoiding an extra tax charge

If you have unused Annual Allowances from previous tax years, they can be 'carried forward'.

To qualify, you must have been a member of a registered pension scheme at some point in the earlier tax years. 'Member' is defined as:

  • an active member
  • a pensioner member
  • a deferred member
  • a pension credit member

Importantly, the above definitions do not mean that contributions or accruals need to have been made in the relevant tax year.

For example: You decide to make a one-off contribution into a registered pension scheme in October 2019, meaning you became a member of the scheme during the tax year 2019/2020. No further contributions were made in the following years. However, because your money is still invested, you're classed as a member of a registered pension scheme in 2020/2021, 2021/2022 and 2022/2023 and can take advantage of the carry forward rule for those previous three tax years.

The following example shows you how you could make the most of your unused allowances using carry forward:

1. The annual allowance for this tax year (2023/2024) has to be used up first. If the contributions exceed £60,000, carry forward can be used to reduce a tax charge.

2. You then start by using up any annual allowance from the earliest of the three years available. In the current tax year, this will be 2020/2021.

Here’s an example:

The total unused allowance you can carry forward to 2023/2024 is:

£52,000 (£26,000 + 21,000 + £5,000).

This means you can make a total contribution in 2023/2024 of £112,000 (£52,000 + £60,000).


The information, money-saving tips, tools and techniques provided are for guidance purposes only and do not constitute financial advice. Where we provide links to third-party websites we are not responsible for their content. It is therefore important you carry out your own independent research.

If you need financial advice you can locate an adviser on the MoneyHelper website below.

Find an adviser.