By TIM STALKARTT 14/02/2012
Carry forward rules and the annual allowance
Although annual pension contributions are now capped at £50,000, the new ‘carry forward’ rules allow investors to add up to £200,000 to their pension pot in the current tax year.
How can carry forward boost your pension fund?
In the example below Henry has accrued £350k in pension savings. In the last four years he has made the following contributions:
| Year | Contribution | Annual allowance carried forward |
| 2008/09 |
Nil |
£50k |
| 2009/10 |
£20k |
£30k |
| 2010/11 |
£20k |
£30k |
| 2011/12 |
£50k |
nil |
| Total |
£90k |
£110k |
The pension allowance per year over the last four years is £50k; Henry has contributed £90k, therefore his carry forward allowance is £110k.
This means Henry would make an actual payment of £88k (ie £110k net of 20% tax relief), with a tax refund of £33k (ie 30% additional tax relief on gross £110k contribution).
Net cost of the £110k contribution is £88k (£110k – £33k).
What are the next steps?
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