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The money purchase annual allowance (MPAA)

Once a client flexibly accesses a DC pot, tax-relieved DC input is capped at £10,000 a year. Carry forward cannot cover the excess.

Based on HMRC’s Pensions Tax Manual (PTM056510, PTM055100) and Finance (No. 2) Act 2023.

4 min read · Last reviewed 12 Jun 2026

— In short

The money purchase annual allowance is a reduced allowance that applies once a client flexibly accesses a defined-contribution pot, for example by taking flexi-access drawdown income or an UFPLS. From 2023/24 it caps tax-relieved DC input at £10,000 a year, up from £4,000. Carry-forward can never be set against it, so any excess over £10,000 is charged. Defined-benefit accrual is tested separately against a £50,000 alternative allowance.

Put the rule to work

Run the calculation

Use the Money Purchase Annual Allowance (MPAA) calculator with your figures and see the working. Free, with no sign-up required.

Run the calculator

The money purchase annual allowance — the MPAA — is a reduced allowance for defined-contribution saving that kicks in once a client has flexibly accessed a DC pot. It exists to stop members drawing benefits and recycling the tax-relieved cash straight back into a pension.

The rule

Specific events trigger it — most often taking income from a flexi-access drawdown fund, or an uncrystallised funds pension lump sum (UFPLS). Tax-free cash alone does not trigger it. Nor does capped-drawdown income kept within the old pre-2015 limits.

Once triggered, DC input above £10,000 in a tax year attracts an annual allowance charge — that figure has applied from 2023/24, up from £4,000. Carry forward cannot be set against the MPAA, so any unused allowance the client was relying on is gone for DC input from here on. Defined-benefit accrual is tested separately, against an “alternative annual allowance”.

The alternative allowance is the normal allowance minus the MPAA — £50,000 at today’s levels (£60,000 − £10,000). A member who has triggered the MPAA is tested twice: DC input against the £10,000 cap, and any DB accrual against the £50,000 alternative allowance, with the taper still able to cut the latter for high earners. The split is deliberate. It lets a member keep building DB pension while choking off the recycling of tax-relieved cash into a DC pot — the abuse the MPAA exists to stop.

Worked example

Take a client who triggers the MPAA, then pays £15,000 into a DC pension in 2025/26.

DC input after an MPAA trigger (2025/26)

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

Try it — pre-loaded with a post-trigger case (£15,000 DC input, £20,000 DB) with a £5,000 chargeable excesschange any figure to recompute

— Inputs

This year, income, and the three prior years.

Tax year

Versioned config per year — AA, taper threshold and MPAA all move.

Tax residence

The annual-allowance charge is levied at the member's marginal rate on non-savings income, so a Scottish taxpayer is charged on the Scottish bands (PTM056110).

MPAA status

Flexible access (e.g. UFPLS, flexi-access income) triggers the MPAA.

DC contributions this year (PIA)

All money-purchase inputs: member + employer + tax relief.

of which employer contributions

Employer contributions (incl. salary sacrifice) count toward the AA but are NOT capped by your relevant earnings.

DB pension input amount this year

From the DB PIA calculation (16× method) — not contributions paid.

Relevant UK earnings

Caps tax-relievable MEMBER contributions at the greater of 100% of earnings and £3,600 gross. Employer contributions sit outside this cap. Pension, property, savings and dividend income are not relevant UK earnings.

Threshold income

Net income LESS the gross of the member's relief-at-source contributions (net-pay and salary-sacrifice ones are already out of net income — don't deduct twice), PLUS any pay given up under a salary sacrifice made on or after 9 July 2015. At or below the gate → no taper, whatever the adjusted income.

Adjusted income

Net income plus all pension input (incl. employer). Drives the £1-for-£2 taper.

Pension input in the three prior years

Pension input · 2024/25

Scheme member this year

Pension input · 2023/24

Scheme member this year

Pension input · 2022/23

Oldest year — consumed first.

Scheme member this year

Enter the pension input (all contributions) for each prior year — the tool derives the unused allowance as that year’s annual allowance minus the input, so a membership year with no contributions carries the full allowance forward (PTM055100). Untick “scheme member” for any year the client held no registered-scheme membership — that year is excluded from carry-forward. Prior-year taper isn’t applied here; the full pension workbench (free account) derives it from the contribution and income history.

Chargeable excess

£5,000.00

Estimated AA charge at marginal rate: £2,000.00.

DC input above the MPAA: £5,000.00 (money-purchase input £15,000.00 against the £10,000.00 MPAA) — chargeable regardless of carry-forward. Carry-forward is not available for the money purchase annual allowance (PTM055100).

The working

Standard annual allowance£60,000.00

MPAA caps the DC leg£10,000.00

Applicable AA this year£60,000.00

Carry-forward available£0.00

Total allowance£60,000.00

Pension input tested£35,000.00

DC input above the MPAA (chargeable regardless of carry-forward)£5,000.00

Chargeable excess£5,000.00

The money-purchase annual allowance was triggered DURING this tax year and the member made money-purchase contributions in the year. Per HMRC PTM056520, only the contributions made AFTER the flexible-access trigger are tested against the MPAA — contributions made BEFORE the trigger count toward the normal annual allowance. This calculation treats ALL of the year’s money-purchase input as post-trigger, which can over-state the alternative chargeable amount AND over-state the unused annual allowance carried forward into later years (s.228A(8)). If any of the input was made before the trigger date, split the figure (pre-trigger toward the normal AA, post-trigger against the MPAA) and re-run for the exact charge and carry-forward.
This calculation caps money-purchase contributions at the MPAA, but the flexible-access event behind the trigger was not specified. A bare flag cannot distinguish a genuine MPAA trigger (UFPLS, first flexi-access drawdown income, a flexible annuity, etc.) from a benefit crystallisation that does NOT trigger the MPAA (a scheme pension, a within-cap capped-drawdown, or a PCLS taken without flexibly accessing the residual fund). Confirm a real flexible-access trigger occurred — and record which one — before relying on this charge (HMRC PTM056520 / PTM056530 / PTM062710; FA 2004 s.227G).
Unused Annual Allowance for 2024-25 computed against the untapered standard AA. If the member was a high earner that year, the carry-forward figure may be overstated — supply adjusted + threshold income for 2024-25 to taper-compute per PTM057100.
Unused Annual Allowance for 2023-24 computed against the untapered standard AA. If the member was a high earner that year, the carry-forward figure may be overstated — supply adjusted + threshold income for 2023-24 to taper-compute per PTM057100.
Unused Annual Allowance for 2022-23 computed against the untapered standard AA. If the member was a high earner that year, the carry-forward figure may be overstated — supply adjusted + threshold income for 2022-23 to taper-compute per PTM057100.
One or more years in the carry-forward evidence had pension input exceeding that year's own applicable annual allowance: 2022-23 (£20,000). Per FA 2004 s.228A(5)-(7), that excess is automatically covered by carry-forward from EVEN OLDER years (oldest-first) before any of it can reach 2025-26 — this calculation has applied that set-off, which may reduce the carry-forward available below what looking at each year in isolation would suggest.
The member has flexibly accessed a money-purchase pot (MPAA active) and DC contributions exceed the MPAA. Per HMRC PTM056510 the annual-allowance charge applies to the greater of the default and alternative chargeable amounts — here the alternative is greater, so a charge arises even though total pension input is below the headline annual allowance.
The annual-allowance charge was stacked on a base derived from adjusted income (which includes employer pension contributions) rather than the member’s reduced net income per HMRC PTM056130. This can over-state the charge where the excess straddles a tax-band boundary. Supply the member’s taxable income (after personal allowance, excluding employer contributions) to compute the exact figure.
The annual-allowance charge assumes the member made no personal (relief-at-source) pension contributions or Gift Aid donations this year. If they did, the basic and higher rate limits are extended by the grossed-up amount (FA 2004 s.227(4C)) and the charge may be lower. Supply the grossed-up total to compute the exact figure.

PTM051100 · PTM055100 · PTM057100 · PTM056510

Open the full MPAA calculator →

The common error

The classic slip is to reach for carry forward — three years of unused allowance to wipe out the excess over £10,000. It doesn’t apply to the MPAA. The other is using the old £4,000 cap. Either understates the charge.

Two tools run this on real figures: the MPAA calculator tests DC input against the £10,000 cap with the default-versus-alternative chargeable-amount working shown, and the pension annual allowance calculator puts the MPAA alongside the taper and carry-forward for the whole position.

HMRC PTM056510 (money purchase annual allowance) · £10,000 from 2023/24 per Finance (No.2) Act 2023 · carry-forward interaction per PTM055100 / ADR-038.

Sources & grounding

Rule basis: HMRC PTM056510 (money purchase annual allowance) — triggers (flexi-access drawdown income, UFPLS, etc.) and the DC cap.
Primary sources:PTM056510
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.
Carry-forward interaction: ADR-038 / PTM055100 — carry-forward can never be set against the MPAA, but it survives for the alternative annual allowance (DB side) and the default test.
Primary sources:PTM055100

For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.

Put this to work on a real case.

Open the Money Purchase Annual Allowance (MPAA) calculator with the worked example above already filled in. Money Purchase Annual Allowance (MPAA) calculator

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