Money purchase annual allowance

What the MPAA means

The money purchase annual allowance (MPAA) is a pension-saving tax limit that applies after certain forms of flexible access to money purchase pensions. It is not a pension balance or a recommended contribution.

HMRC lists the MPAA as £10,000 for 2026/27. Earlier years can have different limits. The figure alone does not establish which rules apply to you or whether a charge is due.

Sources: HMRC: Pension schemes rates

The event matters

Examples of trigger events include taking income from your own flexi-access drawdown fund and receiving an uncrystallised funds pension lump sum. The earliest qualifying event establishes first flexible access. Once triggered, the test applies in that tax year and subsequent years.

Not every pension payment is a trigger. A pension commencement lump sum by itself and a payment meeting the specific small-lump-sum rules are examples of non-triggering payments. A small withdrawal is not automatically a qualifying small lump sum; ask the scheme how the payment was made. These examples are not a complete trigger checklist.

Sources: HMRC: MPAA trigger events (PTM056520)HMRC: Payments that do not trigger the MPAA (PTM056530)

Keep the trigger date with contributions

In the first trigger year, HMRC tests relevant defined contribution saving from the day after first flexible access to the tax year’s end. If first access was in an earlier year, the whole current tax year is relevant. Do not replace the actual date with an assumed retirement date.

Contributions include amounts from you and others, including employers and tax relief. Ask each scheme for labelled figures and retain the flexible-access statement.

Sources: HMRC: Money purchase annual allowance after flexible access

A fictional record example

Assume Taylor’s trigger occurred in an earlier tax year. In 2026/27, labelled records show £3,000 of gross member contributions and £4,000 from an employer in one arrangement, plus £2,000 of gross contributions elsewhere. The combined contribution record is £9,000, not a separate total to test for each pot.

This illustrates combining records only. The gross figures already include relief where applicable. It does not decide Taylor’s trigger, assess other pension input, calculate a tax charge or recommend paying more.

Sources: GOV.UK: Pension annual allowance

Carry forward does not increase the MPAA

Unused annual allowance from earlier years cannot cover an excess over the MPAA. Unused MPAA cannot be carried forward. Eligible unused annual allowance may affect the separate alternative-allowance check for other input, but it does not enlarge the MPAA itself.

Where relevant, other input includes defined benefit pension saving and defined contribution saving before first flexible access in the trigger year. HMRC’s process compares alternative and default chargeable amounts. A single comparison with the headline annual allowance is insufficient.

Sources: HMRC: Money purchase annual allowance after flexible access

Contribution relief remains separate

Tax relief on your own contributions has its own earnings-related conditions. A payment receiving relief does not settle the annual-allowance tax check; relief and a possible charge are different questions. Preserve both the amount paid and any gross figure shown by the provider.

Sources: GOV.UK: Tax relief on private pension contributions

Why checking matters

The rules can matter when you access pensions and continue contributing, including through an employer. Keep contributions across schemes together rather than treating each pension as having an independent MPAA.

If a charge is due, follow HMRC’s reporting instructions. A scheme paying a charge is conditional and can reduce benefits; Self Assessment reporting is still required when the scheme pays. Seek appropriate tax help if your records or position are unclear.

Sources: GOV.UK: Pension annual allowanceHMRC: Who must pay the annual allowance tax charge

A useful record, without guessing

Keep the original payment description, flexible-access statement, event date, tax year, scheme names and labelled contribution records together. Mark missing documents or unanswered questions as unknown. For defined benefit saving, obtain the scheme’s pension input figure rather than adding payslip deductions.

All Pensions organises records; this definition does not determine a personal trigger, calculate or file tax, or instruct withdrawals or contributions. You do not need to enter personal information to read it.

Sources: GOV.UK: Pension annual allowance

Keep learning

• Annual allowance →
• Carry forward →
• Defined contribution →
• Defined benefit →
• Pension drawdown →
• Pension tax relief: understand the method and keep the right records →