What is the Money Purchase Annual Allowance?

The Money Purchase Annual Allowance (MPAA) is a rule that reduces the amount you (and your company/employer) can pay into a pension plan to £4,000 (for the current tax year). Paying more results in a tax charge.

When is the MPAA Triggered?

  • When you take flexi-access drawdown income.
  • Taking an uncrystallised pension lump sum (UFPLS) or a stand alone lump sum.
  • Flexible drawdown which was set up before 6 April 2015.
  • Certain small scheme pensions and overseas payments.

The MPAA Doesn't Include

  • Taking tax free cash but deferring the income
  • If you receive a scheme pension from a defined benefit scheme
  • ‘Capped income drawdown’ that was set up pre 6 April 2015, if you’re staying within the limits.
  • A small pot pension worth less than £10,000.

Have you Paid Too Much?

HMRC has a tool so you can easily check if you’ve exceeded the Money Purchase Annual Allowance. You can find it here

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Risk Warnings

This article and the information on this website is not personal advice. It’s only intended to give you a brief summary or highlight a particular issue for you to investigate further. It is based on our current understanding of legislation and HMRC guidance which can change and is correct as of the date of the post.

If you’re in any doubt whether a particular course of action is suitable for your circumstances, you should seek professional advice. Tax rules can change and any benefits depend on individual circumstances. And, if you are unsure any reliefs are applicable to you, you should consult your accountant or HMRC.

The value of investments and any income from them can fall as well as rise, so you could get back less that you put in. Past performance is not a guide to the future. It cannot provide a guarantee of the future returns of a fund.

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