Watch the explainer · 1 min 30 s
The annual allowance, explained
1 min 30 s · Captions on · Official sources checked 30 September 2026
Watch on its own pageThe annual allowance is the most your pension savings can grow in a tax year before you have to pay tax. For a public service pension, what counts is the growth in the value of your pension, not the contributions you pay.
Since April 2023, the standard allowance has been £60,000 a year, and it covers all your pensions together.
To measure growth, your yearly pension is multiplied by sixteen, and any separate lump sum is added. The value at the end of the tax year is then compared with the start, after allowing for inflation.
That's why a large pay rise, such as a promotion, can push your growth over the allowance, especially if you have long service.
Anything over the allowance is added to your taxable income, and taxed at the rates that apply to you.
Unused allowance from the previous three tax years can be carried forward, if you were in a registered pension scheme in those years. And for the highest earners, the allowance can be tapered, down to a minimum of £10,000.
If you go over, you report it on a Self Assessment return, even if your scheme pays the charge. For 2025 to 2026, the online deadline is 31 January 2027.
To see whether the annual allowance could affect you, start with Remedy's free check at remedy.tax.
Carry Forward Tools & Guides
Carry Forward Timeline
Current Year (2026/27)
Use £60,000 allowance first (or tapered amount)
2023/24
Up to £60,000 unused allowance available (the earliest year, used first)
2024/25
Up to £60,000 unused allowance available
2025/26
Up to £60,000 unused allowance available
What is Carry Forward?
How to Calculate Unused Allowance
Impact of Tapering
When to Use Carry Forward
Record Keeping
Common NHS Carry Forward Traps
Current year first
Carry forward only helps after the current year allowance has been used. Do not offset previous years before checking the current-year PIA.
Tapered years stay tapered
If a previous year was tapered, you can only carry forward unused allowance from that reduced figure, not automatically the full standard allowance.
Scheme membership matters
You must have been a member of a registered pension scheme at some time in the year you want to carry forward from. If you were a member but had no pension growth, the full allowance for that year carries forward.
Whole-year opt-outs don't count
If you were opted out for the whole tax year and not in any other registered pension scheme, you cannot carry forward from that year. Keep evidence of your membership dates.
Worked planning example
If your current-year PIA is £82,000 and your untapered annual allowance is £60,000, the first £60,000 is covered by the current year. The remaining £22,000 can then be tested against unused allowance from the previous three years.
Unused allowance is used from the earliest year first. Say you have nothing unused from 2023/24, £15,000 unused from 2024/25 and £10,000 unused from 2025/26: the £15,000 is used first, then £7,000 of the £10,000, and no charge is due. If you were tapered in any of those years, its unused amount is worked out against the tapered allowance for that year. Figures are illustrative.
Record Keeping Essential
Carry Forward requires detailed record keeping of previous years' pension growth and allowances. Keep all Pension Savings Statements, P60s, and documentation of promotions or additional work that affects your pension growth.
Related guides
These related guides cover the next questions that usually come up after this topic.
Required Actions
Gather historical data
Collect pension statements and growth information for previous three years
Calculate unused allowances
Determine available carry forward from each qualifying year
Plan strategically
Use carry forward to manage expected pension growth or make additional contributions
Seek professional advice
Consider financial advice for complex carry forward situations