Money purchase annual allowance

Produced by Tolley in association with

Employment Tax

Guidance

STOP PRESS: This guidance note may be affected by the changes to the taxation of pensions made by FA 2024, Sch 9 from 6 April 2024 onwards. The commentary below covers the rules that apply prior to that date. Before continuing your research, see the Abolition of the lifetime allowance guidance note.

Introduction

The annual allowance in relation to registered pension schemes is the maximum amount:

•
by which a member’s benefits can increase in a pension input period (PIP) (in respect of defined benefit schemes)
•
that can be contributed to pension arrangements in a PIP (for defined contribution or money purchase schemes)

without risk of the member suffering a tax charge on this increase in a member’s benefits / amounts contributed.

If the annual allowance is exceeded in a tax year, the individual is at risk of suffering a tax charge (the

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