Money purchase annual allowance (MPAA) calculator

Once a member flexibly accesses a money-purchase pot the money purchase annual allowance applies. From the day after the trigger, money-purchase contributions are capped at £10,000 a year (it was £4,000 before 2023/24). Defined-benefit accrual is not capped by the MPAA; it is tested against the alternative annual allowance if the MPAA is exceeded. The cap persists once triggered. Taking only a tax-free lump sum does not trigger it, and neither does capped drawdown income kept within the GAD cap.

The trigger list is longer than the two events most summaries name. Any of these fires it: an uncrystallised funds pension lump sum (UFPLS); income taken from flexi-access drawdown; exceeding the GAD cap on a pre-2015 capped drawdown arrangement (income within the cap does not); payments from a flexible annuity; a stand-alone lump sum paid to a member with primary protection and protected tax-free cash above £375,000; a scheme pension from a money-purchase arrangement where entitlement began on or after 6 April 2015 and, at that time, fewer than 11 other people were entitled to a scheme or dependants' scheme pension from the same scheme (collective money-purchase schemes and certain insured annuity contracts are excluded); the equivalent payments from a tax-relieved overseas pension scheme; and having been in the pre-2015 flexible drawdown regime. What does not fire it: a pension commencement lump sum on its own, designating funds to flexi-access drawdown without drawing income, any other scheme pension, a lifetime annuity without flexible features, and a small-pot lump sum. Classify the event before setting the flag — the tool caps whatever you tell it is triggered.

The MPAA bites from the day after the trigger, not from 6 April. In the year flexible access first happens, the MPAA applies to money-purchase input paid from the day after the trigger. For a cash-balance arrangement the input is split by days instead: the part after the trigger is the input for the whole pension input period multiplied by the number of days from the day after the trigger to the end of that period, divided by the number of days in the period. Input paid up to and including the trigger day is not tested against the MPAA; it is counted with the member's other pension input (such as defined-benefit accrual), which is tested against the alternative annual allowance if the MPAA is exceeded. Only the input after the trigger is compared with the MPAA to decide whether the alternative test applies at all: where it is within the MPAA the alternative test does not apply and the charge is worked out on the default test alone, however much was paid before the trigger. The alternative allowance the earlier input is tested against includes any carry-forward. All of the year's input, before and after the trigger, still counts in the default test against the ordinary allowance. This quick tool has no trigger-date field, so it treats the whole year's money-purchase figure as post-trigger. That is a caveat, not a safe default, and it cuts both ways for a member who front-loaded contributions earlier in the year: it overstates the alternative chargeable amount, and — through the s.228A(8) substitution — it can also overstate the unused allowance carried forward out of that year. Neither this tool nor the full pension workbench splits the year's money-purchase input at the trigger date (the guided carry-forward workflow records the date but does not split the figure either). Before relying on a trigger-year result, obtain the split from the scheme: input paid up to and including the trigger day, and input paid after it. Do not simply leave the earlier part out: it still counts in the default test and is tested with the other input against the alternative allowance.

HMRC computes the charge two ways and takes the larger. The default chargeable amount tests total input (DC + DB) against the full annual allowance plus carry-forward, exactly as for any member. The alternative chargeable amount tests the DC input over the year's MPAA, plus any DB input over the alternative annual allowance — the applicable annual allowance minus the MPAA. In the trigger year only the money-purchase input after the trigger is tested against the MPAA; the input up to and including the trigger day joins the DB input. The alternative amount exists to catch DC saving over the cap even when total input would otherwise clear the allowance. The tool runs the same engine as the signed-in product, so both legs are priced, not approximated.

Carry-forward is never set against the MPAA itself. It survives an MPAA year and stays available for the default test and the DB-side alternative allowance — but the DC input over the year's MPAA is chargeable regardless of how much unused allowance exists. There is no carrying forward of an unused MPAA either.