Carry forward allows you to make use of any annual allowance you may not have used during the three previous tax years, provided that you were a member of a registered pension scheme.
You can use carry forward if you’re an active member currently building up pension benefits; a deferred member with paid-up pension benefits; a pensioner member, in receipt of pension benefits from your pension scheme, or a pension credit member, where you have a share of your ex-partner’s pension scheme. Carry forward may be particularly useful if you’re self-employed and your earnings change significantly each year, or if you’re looking to make large pension contributions.
To use carry forward, you must pay in more than the maximum contribution in the current tax year (£40,000 in 2019/2020) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago.
You can’t receive tax relief on contributions in excess of your earnings in a tax year and you only receive higher rate tax relief to the extent that you’ve paid it.
For further information please contact your financial adviser.