Taper and carry forward together: the order of operations

For a high earner the annual allowance resolves in two steps, and the order is fixed. First, fix this year's allowance. If threshold income exceeds £200,000 and adjusted income exceeds £260,000, the £60,000 standard allowance tapers by £1 for every £2 of adjusted income over the limit, to a floor of £10,000. Then ask how much unused allowance from the three prior years can top it up. Taper first, carry forward second — the taper sets the base the carry forward stacks on, and carry forward never restores a tapered allowance.

Worked end to end

2026/27: adjusted income £300,000, threshold income £240,000 (net income of £240,000 plus the £60,000 employer contribution gives the adjusted income), a £60,000 employer contribution (the whole PIA). Unused allowance on file: £10,000 from 2024/25 and £15,000 from 2025/26; 2023/24 fully used.

Consumption runs current-year allowance first, then prior years oldest first: £40,000 against 2026/27, then the £10,000 from 2024/25 in full, then £10,000 of the £15,000 from 2025/26 — leaving £5,000 of 2025/26 unused and still alive for next year. The order is statutory (FA 2004 s.228A(7)) and it works in your client's favour: the oldest year is the next to drop out of the window, so using it first wastes least. Here the £5,000 left from 2025/26 can still be carried to 2027/28 and 2028/29; had £5,000 of 2024/25 been left instead, it would have been usable only in 2027/28.

PTM057100 (taper) · PTM055100 (carry forward, consumption order) — figures engine-computed against the 2026/27 config

The common errors

The expensive one is measuring prior-year unused allowance against the £60,000 standard figure when the member was tapered in those years too. A £300,000-income current year does not establish the position in 2024/25 or 2025/26: check both income tests for each year. Where that year was tapered, unused allowance is whatever was left of its tapered allowance, which may be £0, rather than automatically £60,000-minus-contributions. Two smaller traps. Threshold income is the gate: at or below £200,000 no taper applies at any adjusted income, but pay sacrificed under relevant arrangements made after 8 July 2015 is added back for that test. And carry forward requires registered-scheme membership in the prior year, not contributions.

The tapered annual allowance calculator and the carry forward calculator run the two halves of this computation on the same engine, with each prior year taken at its own year's config.

Prior-year taper: PTM055200 — unused allowance is computed against the reduced (tapered) annual allowance where it applied