Money purchase annual allowance

Produced by a Tolley Personal Tax expert

Personal 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

As discussed in the Annual allowance guidance note, 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 (for defined benefit schemes), plus
•
that can be contributed to pension arrangements in a pension input period (for defined contribution or money purchase schemes)

The total of these figures is the pension input amount.

If the pension input amount exceeds the annual allowance (£60,000 from the 2023/24 tax year onwards), there is a tax charge

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