If you haven’t used your full Annual Allowance in previous years, you can carry forward the unused amount to the next tax year. You can carry forward up to 3 previous years’ unused allowance. In order to receive tax relief on your total contribution it cannot exceed your gross annual earnings.
Here’s an example of how this works:
Josh has made the following pension contributions over the last tax years:
||Amount Carried Forward
From April 2011 to April 2015, the Annual Allowance was £50,000. From 6th April 2015 it reduced to £40,000, but you can carry forward unused contributions based on the Annual Allowance that prevailed at the time.
Josh has £30,000 of carried forward annual allowance plus his 2016/17 allowance of £40,000. He can therefore contribute up to £70,000. He decides to contribute £50,000 in order to use the carried forward allowance from 2013/14 before it is lost. As his earnings are £90,000 he receives tax relief on this amount.