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
