Guidance

Check if you have unused annual allowances on your pension savings

If your pension savings are more than your annual allowance, carry forward unused annual allowances from previous years.

Your annual allowance is the limit on the amount of pension savings that can be made to all your pension schemes in a tax year before you have to pay tax on them. This can be from a:

  • defined contributions arrangement - where your pensions savings is the total contributions you (or a third party like your employer) have made
  • defined benefits arrangement - where your pension savings is the increase in the value of your promised benefits under the pension scheme, from the start to the end of the period your pension savings are measured (from 2016 to 2017 this is the tax year)

You will not be taxed on pension savings over your annual allowance if you have enough unused annual allowance from previous years to carry forward. You can carry forward unused allowance from the 3 previous tax years.

This annual allowance only applies to pension savings made to your UK registered pension schemes, or to overseas schemes where either you or your employer qualifies for UK tax relief.

If your ‘adjusted income’ is over £150,000 and your ‘threshold income’ is over £110,000, you’ll need to work out your reduced annual allowance.

When you cannot carry forward unused annual allowance

If you have unused money purchase annual allowance, you cannot carry this forward, but you can carry forward any unused alternative annual allowance.

You cannot carry forward unused allowances from any tax year where you were not a member of at least one UK registered pension scheme, or a qualifying overseas pension scheme.

Check if you have unused annual allowance

Use the calculator to check if:

  • your pension savings are more than your annual allowance
  • you have any unused annual allowance to carry forward

You cannot use the calculator, and will need to work out if you have unused annual allowances yourself, if your:

Work out your unused annual allowances yourself

You have unused annual allowance if your pension savings were less than your annual allowance for the tax year.

You can ask each of your pension providers for details of your pension savings for each scheme if they’ve not already sent them to you.

If you had unused allowance from the 2015 to 2016 tax year, you need to check if you had a different allowance for that tax year.

Find out the annual allowance in previous years

See the pension scheme annual allowance rates for the annual allowance in previous tax years.

The annual allowance rules for the 2015 to 2016 tax year were different.

6 April 2015 to 8 July 2015 annual allowance

The annual allowance for 6 April 2015 to 8 July 2015 (known as the ‘pre-alignment tax year’) was £80,000. This allowance was available against pension savings made in pension input periods ending in that tax year.

If the money purchase annual allowance rules applied, you would have had an alternative annual allowance of £60,000, plus a money purchase annual allowance of £20,000 for that tax year.

9 July 2015 to 5 April 2016 annual allowance

The annual allowance for 9 July 2015 to 5 April 2016 (known as the ‘post-alignment tax year’) was zero.

You could have carried forward up to £40,000 of unused annual allowance from the pre-alignment tax year if you were a pension scheme member in that year.

If the money purchase annual allowance rules applied, you may have had an unused alternative annual allowance of up to £30,000, and unused money purchase annual allowance of up to £10,000 to use in the post-alignment tax year.

If you were not a pension scheme member in the pre-alignment tax year, but became one in the post-alignment tax year your post-alignment annual allowance is £40,000. If the money purchase annual allowance rules applied for the post-alignment tax year, you would have had an alternative annual allowance of £30,000, and a money purchase annual allowance of £10,000.

Carry forward your unused annual allowance

You can carry forward unused annual allowances from the 3 previous tax years. You do not need to report this to HMRC.

If you have unused annual allowances from more than one year, you need to use them in order of earliest to most recent.

If you only need to use some of your unused annual allowance or alternative annual allowance from a tax year, you can use the rest in a future year.

If you do not have unused annual allowance

If your pension savings are more than your annual allowance for the tax year, and you do not have unused annual allowances from the 3 previous tax years to cover the difference, you’ll have to pay tax.

Published 9 August 2018