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Your unused Annual Allowance

Find out how your unused Annual Allowance can help you manage your tax libaility

What is your unused Annual Allowance?

This is any Annual Allowance (AA) you have left over from the previous three tax years. It’s known as carry forward.

If your pension savings have gone over the AA for the current tax year, you can carry forward any unused AA (starting from the earliest of the three years first) to reduce the amount you’re over by.

You’ll only have to pay tax if you’re still over the AA (currently £40,000 per tax year) after you’ve used all of your carry forward.

When can you carry forward unused AA?

You can do this as long as during the tax year:

  • you’ve built up benefits in a registered pension scheme in the UK like USS
  • you or your employer were able to get tax relief on pension savings with an overseas pension scheme.

Keep track of what you’ve used

You need to keep track of any unused AA – and any years when the Tapered Annual Allowance and/or Money Purchase Annual Allowance (MPAA) may have applied.

If the unused AA you carry forward covers the amount you’re over by, you won’t need to complete a self-assessment tax return for AA purposes – but you may still need to complete one for other reasons. Keep a detailed record of your carry forward in case HMRC ask for more information in the future.

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