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Does a UFPLS trigger the MPAA? (and what else does)
A UFPLS triggers it; tax-free cash on its own doesn’t. Where flexible access sets the MPAA off, and where benefits leave it untouched.
Based on HMRC’s Pensions Tax Manual (PTM056510 general, PTM056520 trigger events, PTM056530 payments that do not trigger) and Finance (No. 2) Act 2023.
4 min read · Last reviewed
— In short
Yes. Taking an uncrystallised funds pension lump sum triggers the money purchase annual allowance, so from that date defined-contribution saving with tax relief is capped at £10,000 a year and carry-forward cannot lift it. Drawing flexi-access drawdown income or a flexible annuity triggers it too. Taking only tax-free cash, capped drawdown within the old limits, or a scheme pension does not.
Put the rule to work
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Use the Money Purchase Annual Allowance (MPAA) calculator with your figures and see the working. Free, with no sign-up required.
Yes. Taking an uncrystallised funds pension lump sum (UFPLS) is a trigger event for the money purchase annual allowance (MPAA). From the date of the UFPLS, the most the member can pay into defined-contribution pensions with tax relief drops to £10,000a year — and carry-forward can't lift that ceiling.
What triggers it — and what doesn't
The MPAA targets flexible access: drawing taxable income flexibly from a DC pot, of which a UFPLS is one form (25% tax-free, 75% taxable, in a single lump). Which events set it off and which leave it alone is a closed list:
- UFPLS
- Triggers
- Income from a flexi-access drawdown fund
- Triggers
- A flexible (post-2015) annuity
- Triggers
- Tax-free cash (PCLS) on its own
- Does NOT trigger
- Capped drawdown income within the old limits
- Does NOT trigger
- Small-pots commutation (≤£10,000)
- Does NOT trigger
- A scheme pension or lifetime annuity
- Does NOT trigger
Take only the tax-free cash and move the rest into drawdown without drawing income, and the MPAA stays untouched. Take a UFPLS, or start drawing income from the drawdown fund, and it bites. Defined-benefit accrual is never a DC trigger.
What the trigger costs
Once triggered, DC input above £10,000 in a tax year attracts an annual allowance charge — and, unlike the standard allowance, no carry-forward can be set against the MPAA. Say the member triggers the MPAA, then pays £15,000 into a DC pension:
- DC pension input
- £15,000
- Money purchase annual allowance
- £10,000
- Carry-forward available against the MPAA
- £0
- Amount carried to the AA charge
- £5,000
The classic slip is assuming tax-free cash triggers it (it doesn't), or that carry-forward can soak up the excess over £10,000 (it can't — see MPAA and carry forward). Test DC input against the cap, with the default-versus-alternative working shown, on the MPAA calculator, or see the whole position alongside the taper and carry-forward on the pension annual allowance calculator. Signed in, the working prints to a compliance-annex PDF for the file.
PTM056520 / PTM056530 (money purchase annual allowance ; trigger events) · £10,000 from 2023/24 per Finance (No. 2) Act 2023
Common questions
- Does taking a UFPLS trigger the MPAA?
- Yes. An uncrystallised funds pension lump sum is a flexible-access trigger event (PTM056520). From the date of the UFPLS, defined-contribution input above £10,000 a year attracts an annual allowance charge, and carry-forward can’t be set against that cap.
- Does taking tax-free cash trigger the MPAA?
- No. Taking only the pension commencement lump sum (tax-free cash) and moving the rest into drawdown — without drawing taxable income — does not trigger the MPAA. It’s drawing the taxable income flexibly (or a UFPLS) that sets it off.
- How much is the MPAA?
- £10,000 a year for 2023/24 onwards (it was £4,000 from 2017/18 to 2022/23). It caps defined-contribution saving that gets tax relief once you’ve flexibly accessed a DC pot.
- Does the MPAA stop defined-benefit accrual too?
- No. The MPAA only limits defined-contribution input. Defined-benefit accrual is tested separately against an “alternative annual allowance” (the normal allowance minus the MPAA), so DB benefits can keep building.
Sources & grounding
Trigger basis: HMRC PTM056520 / PTM056530 (money purchase annual allowance) — the listed trigger events (UFPLS, flexi-access drawdown income, flexible annuity, etc.) and the events that do NOT trigger it (PCLS/tax-free cash alone, capped drawdown within limits, small-pots commutation, scheme pension, lifetime annuity).
Figure: £10,000 MPAA from 2023/24 (Finance (No.2) Act 2023; previously £4,000), held in the engine config (mpaaAmount), applied by app/calc-engine/pension/mpaa.ts.
Worked charge (£15,000 DC input − £10,000 MPAA = £5,000; carry-forward against the MPAA £0): re-used from the published money-purchase-annual-allowance explainer (articles.tsx).
For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.
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