Annual allowance · Money purchase AA

The money purchase annual allowance (MPAA)

Once a client flexibly accesses a DC pot, DC input above £10,000 a year triggers an annual allowance charge. Carry forward cannot cover the excess.

2 min read · Last reviewed 23 Sept 2026

— In short

The money purchase annual allowance applies after flexible access to a DC pension, such as drawdown income or a UFPLS. From 2023/24 the post-trigger DC limit is £10,000; carry-forward cannot cover an excess. Above that limit, compare the default and alternative chargeable amounts. At or below it, test total pension input against the ordinary allowance, including any taper and carry-forward; the £50,000 alternative allowance is not a separate DB cap in every triggered year.

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Calculators for this topic (5)

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, post-trigger 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 that excess. In the trigger year, pre-trigger DC input belongs with the other pension inputs; it is not tested against the MPAA.

The alternative allowance is the normal allowance minus the MPAA — £50,000 at today’s levels (£60,000 − £10,000; FA 2004 s.227B(2)), before any taper and carry-forward. If post-trigger DC input exceeds £10,000, compare the default chargeable amount with the alternative: DC excess plus any other input above the alternative allowance. Charge the larger amount. If the MPAA is not exceeded, use only the default test of total input against the ordinary allowance, adjusted for taper and available carry-forward.

Worked example

Take a client who triggers the MPAA, and whose employer then pays £15,000 into a DC pension for them 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

Chargeable excess£5,000.00

See the working

Worked example. Estimated AA charge at marginal rate: £1,000.00.

— Inputs

This year, income, and the three prior years.

Tax year

MPAA status

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

DC contributions this year (PIA)

Member + employer + tax relief. Leave out member contributions after age 75.

Why we ask

Member contributions paid after age 75 are not relievable and are not pension input (FA 2004 s.188(3)(a), s.233(1)(a)). Leave them out; employer contributions still count.

DB pension input amount this year

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

Threshold income

Net income, less relief-at-source pension, plus pay sacrificed for pension.

Why we ask

Net income less gross relief-at-source contributions, counting only those within the tax relief limit (the greater of relevant UK earnings and £3,600, less any net-pay or other relievable contributions), plus relevant sacrificed or flexible pay under arrangements made after 8 July 2015, less any taxable lump-sum death benefits. Net-pay contributions are already out of net income, so do not deduct them again.

Adjusted income

Net income plus net-pay contributions and pension input less member contributions.

Why we ask

Net income plus specified contribution-relief addbacks and pension input less member contributions, less any taxable lump-sum death benefits. Relief-at-source contributions are not added again.

Both figures also deduct relevant taxable lump-sum death benefits.

How to work out both income figures.

Pension input in the three prior years

Pension input · 2024/25

Pension input · 2023/24

Pension input · 2022/23

Enter £0 for a year with no pension input. Oldest used first.

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. A prior year is tested for the taper only when you enter both of its incomes under “Prior-year income (for taper)”; otherwise it uses that year’s standard allowance. For this year, the full pension workbench (free account) can also work out threshold and adjusted income from the client’s income components.

Add other income or details · 1 added: Employer contributions £15,000.00

Scottish taxpayer status

Scottish income-tax bands apply to Scottish taxpayers.

Relevant UK earnings

Leave blank if personal contributions are within your relief limit.

Why we ask

Employment income and self-employed or partnership trading profits (and some patent income), before tax; pension, investment and rental income are not relevant UK earnings, except furnished holiday lettings profits up to 2024-25. Relief on your own pension contributions is limited to these earnings, or to £3,600 a year if that is higher for relief-at-source contributions. Employer contributions sit outside this limit.

of which employer contributions

Employer share of the DC input, including salary sacrifice.

Why we ask

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

Not a registered-scheme member in all three prior years

Prior-year income (for taper)

Optional. Enter a year’s threshold income and adjusted income to test that year for the taper: its unused allowance is then measured against that year’s own tapered allowance (PTM057100). A year with only one of the two figures is not tested.

Threshold income · 2024/25

Adjusted income · 2024/25

Threshold income · 2023/24

Adjusted income · 2023/24

Threshold income · 2022/23

Adjusted income · 2022/23

Tax charge details

Why we ask

Enter these figures to work out the charge from your own income and reliefs. They do not change the pension allowance itself. Without taxable income, the charge is estimated from your threshold income, or from adjusted income if threshold income is blank or above adjusted income.

Taxable income before this charge

After personal allowance; exclude employer contributions and this excess.

Why we ask

Income after your personal allowance and deductible reliefs. Do not deduct relief-at-source pension contributions or Gift Aid here. Exclude employer pension contributions and this pension excess. Leave blank and the charge is estimated from your threshold income less the personal allowance, or from adjusted income if threshold income is blank or above adjusted income.

I paid Gift Aid or pension with tax relief added

Gross relief-at-source pension contributions

Gross, including basic-rate relief added. Exclude net-pay and employer contributions.

Why we ask

Include the basic-rate tax relief added to personal payments. Exclude net-pay and employer pension contributions. Relief is given on gross relief-at-source contributions up to the greater of your relevant UK earnings and £3,600 a year (if relevant UK earnings is left blank, the limit is not applied), so only that part moves the tax bands. Contributions deducted from pay before tax use the same limit; this estimate counts your own DC contributions above the relief-at-source figure as such contributions. It assumes you were under 75 when paying, are an active member of a registered relief-at-source scheme and are a relevant UK individual. Leave blank and the charge assumes there were none. If taxable income is blank and threshold income is entered, this figure is not used: threshold income already deducts relief-at-source contributions, and Gift Aid is left out, which can make the charge higher than the exact one.

Gross Gift Aid donations

Cash donated plus the basic-rate tax the charity reclaims (normally cash × 1.25).

Why we ask

Gift Aid extends the tax bands in full: the limit on pension relief does not apply to it. Like the pension figure, it is not used when taxable income is blank and threshold income is entered. Leave £0 if none.

Illustration — worked example

Chargeable excess

£5,000.00

Estimated AA charge at marginal rate: £1,000.00.

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).

Assumes personal contributions are within your tax-relief limit, you were a member of a registered pension scheme at some point in each of the three prior years and no prior year's allowance was tapered.

Assumes rest-of-UK income tax rates.

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

Estimated AA charge£1,000.00

5 notes on this result. Read before relying on the figure

The money-purchase annual allowance was triggered DURING this tax year and the member made money-purchase contributions in the year. Per HMRC PTM056540, only money-purchase input made after the flexible-access trigger (from the day after the trigger date) is tested against the MPAA. Input made up to and including the trigger date is not tested against the MPAA: it is added to the other (defined-benefit) inputs that are tested against the alternative annual allowance, and, like all pension input, it still counts in full in the default test against the 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 up to and including the trigger date, this calculation cannot take the split: treat its charge and carry-forward as provisional and obtain the split from the scheme (contributions paid in each period; time-apportioned for a cash balance arrangement). Do not simply leave the pre-trigger amount out — it still counts in both tests.
Check the flexible access was a genuine MPAA trigger (for example UFPLS or flexi-access drawdown income). A pension commencement lump sum alone, capped drawdown within the limit, or a defined benefit pension does not trigger it (PTM056520, PTM056530).
One or more years in the carry-forward evidence had pension input exceeding that year's own applicable annual allowance: 2022-23 (£20,000.00). Per FA 2004 s.228A(5)-(7), an excess is met first from unused allowance of the three tax years before it, earliest first, before any of that allowance can reach 2025-26. This calculation sets each excess only against years it holds figures for, which may reduce the carry-forward available below what looking at each year in isolation would suggest.
The MPAA applies to this calculation. Carry-forward remains available for the default test and the alternative annual allowance (it can never be set against the MPAA itself) — but unused allowance from any prior year in which the MPAA already applied must be computed against that year’s ALTERNATIVE annual allowance, not the full AA (HMRC PTM055100). Verify the prior-year figures on that basis.
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.

If the member died during the tax year, no pension input arises for it on any policy. If they met the severe ill-health condition under a policy, that policy alone has none (FA 2004 s.229(3)-(4); PTM051200). This tool does not model either case.

PTM051100 · PTM055100 · PTM057100 · PTM056510

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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. Carry-forward wrongly used against the MPAA understates the charge; using the obsolete lower cap overstates the excess.

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 · £50,000 alternative annual allowance per FA 2004 s.227B(2) (the annual allowance less £10,000 ; PTM056510 still prints £30,000 for 2023-24 onwards) · carry-forward interaction per PTM055100 (alternative allowance) and PTM056510 (default test).

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