HMRC have produced a calculator which can be used by individuals to check whether pension savings are more than their annual allowance and whether they have any unused annual allowances to carry forward. The calculator can be found on the website, and associated guidance on the annual allowance is available here.

An individual cannot use the calculator if their pension scheme is a hybrid scheme (one that has aspects of both defined benefit and defined contribution schemes) or if the pension provider has accepted a declaration for flexible drawdown before 6 April 2015.

Individuals are entitled to a pension annual allowance. The allowance is set at £40,000 for 2018/19, but is reduced if ‘adjusted net income’ is more than £150, 000 and ‘threshold income’ is more than £110,000. Where this is the case, the allowance is reduced by £2 for every £1 by which adjusted net income exceeds £150,000, subject to a minimum annual allowance of £10,000.

Unused allowances can be carried forward three years. There will be unused allowances for a particular year if pension savings for that year were less than the annual allowance for that year.

Unused money purchase annual allowances cannot be carried forward.