If they previously purchased a lifetime annuity from their pension, this also counts as being a member of a pension scheme.

A common misunderstanding of carry forward is that it cannot be used to carry forward unused tax relief. If your client wants to make use of carry forward using personal contributions, they must still have sufficient earnings in the tax year they are making the contribution to be eligible for tax relief.

Exceptions 

There are also some circumstances where contributions will not be counted towards the annual allowance. These are contributions made in the tax year where the member:

• dies;

• becomes entitled to all benefits under the scheme due to severe ill health, where they are not expected to be able to work again in any capacity up to state pension age;
• becomes entitled to all benefits under the scheme due to serious ill health, where the member has been diagnosed with a terminal illness with less than 12 months to live.

The second of these is notably stricter than the requirement to access a pension before the normal minimum pension age on ill health grounds.

If you are advising a client who is in serious ill health, they should be aware that an additional contribution made within two years of death would need to be declared by the executors to HMRC (on form IHT409) and could be viewed as a transfer of value from the estate.

This could prevent any inheritance tax advantages of making the contribution.

Bethany Joslyn is a technical consultant at  AJ Bell