What is the money purchase annual allowance
Updated 17 January 2018
If you've flexibly accessed your benefits, the Money Purchase Annual Allowance (MPAA) is the amount that can be paid in one year to your money purchase arrangements without a tax charge applying. For the 2017/2018 tax year, the MPAA will be £4,000.
If the MPAA provisions apply to you, and during the year more than £4,000 has been paid to your money purchase arrangements under all of your registered pension schemes, a tax charge:
- will apply on the money purchase contributions above £4,000, and
- may apply on the value of any savings made to defined benefit arrangements that are higher than £36,000 plus any carry forward you have available.
Special rules apply in the year that the reduced MPAA rules first apply to you. In that year, any money purchase contributions paid before the date the rules apply are treated as if they had been made to a defined benefit arrangement, and tested against the £36,000 plus carry forward limit. Please speak to a financial adviser for more information.