As ever, care is required when deciding when clients should pay these contributions. The key rules are:

• Client will first have had to pay, either personally, or with employer contributions, the £50,000 annual allowance for the 2011/12 tax year.
• Payment of the contributions must be into an arrangement in a pension input period that ends in the 2011/12 tax year and before that input period ends.
• Where the client is paying contributions personally, they cannot exceed 100% of their relevant earnings in the 2011/12 tax year (including that carried forward).
• Carry forward is only available from a tax year where the client was a member of a registered pension scheme. The scheme in question does not have to be the scheme into which the client pays the contribution.
• The carry forward principle starts from the earliest year first, ie 2008/09. If the unused allowance is not used for that year before the start of the 2012/13 tax year they will lose any balance of that allowance.

The process of calculating carry forward to the 2011/12 tax year is relatively straightforward. For the tax years 2008/09 to 2010/11 the difference between £50,000 and the pension input in that tax year can be carried forward to 2011/12. Contributions in excess of £50,000 in any of these three years will not reduce the unused carry forward available from any other carry forward year.

For example:

A simple calculator for 2011/12 carry forward is available here.

The calculation of carry forward to the tax year 2012/13 is the same as for 2011/12 except:

• Pension Input amounts in excess of £50,000 in the 2011/12 tax year will use up unused annual allowance carried forward from the preceding year(s).
• It is necessary to check whether a pension input value for 2011/12 in excess of £50,000 used up any carry forward from the tax year 2008/09 as this won’t use up used annual allowance again in respect of the 2009/2010 and 2010/11 tax years.

The following examples assume that there was no carry forward in respect of the 2008/09 tax year.

Example 2 and 3 illustrate how the excess contribution in 2011/12 uses up previous years unused annual allowance.

Remember the amount counting towards the annual allowance for a tax year is the aggregate of the pension input amounts in respect of pension input periods ending in that tax year.