Money Purchase Annual Allowance

Can someone just clarify for me please

Didn't find your answer?

A client has several defined <b>benefit</b> schemes from which they are receiving income.

They want to make a contribution to a defined <b>contribution</b> scheme to extend their BRB.

Their income is £75,000.  Are they potentially entitled to the full £40,000 allowance (I know there are extra steps depending on scheme growth etc...), or does the MPAA apply and they can only contribute £4,000?

Third party websites seem to suggest the former, but a helpline I just called pointed me to a HMRC page (https://www.gov.uk/guidance/work-out-your-allowances-if-youve-flexibly-a...) and read it as if drawing <b>any</b> pension and contributing to a defined <b>contribution</b> scheme meant the £4,000 applied.  That's not how I'm reading it, but our helpline has so far been infallible so I'm doubting myself.

Many thanks.

Replies (3)

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By Duggimon
05th Jan 2022 10:24

The helpline you called can't read, that page definitely says it applies where the person has drawn from a defined contribution pension pot.

I'm afraid I don't ultimately know the answer to your query off the top of my head, but I am an excellent reader so can confirm if the helpline have reached their decision based on that site alone I wouldn't trust it.

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Replying to Duggimon:
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By ImNotSureBut
05th Jan 2022 10:28

Duggimon wrote:

The helpline you called can't read, that page definitely says it applies where the person has drawn from a defined contribution pension pot.

I'm afraid I don't ultimately know the answer to your query off the top of my head, but I am an excellent reader so can confirm if the helpline have reached their decision based on that site alone I wouldn't trust it.

Thanks Duggimon. Every other site agrees with my/your/our reading (or more accurately while nothing spells it out in the words I would like, each either confirms part of the puzzle or doesn't outright contradict it), so I am reassured.

Not my favourite area of tax, especially as even when I approach experts (such as our helpline, the pension providers or FAs) I get such a range of answers to very similar queries.

But I feel on firmer ground with this one now - I can't see how else to read the HMRC page.

Many thanks again.

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By Catherine Newman
06th Jan 2022 20:46

I can point you in the right direction if your client is prepared to pay. She is an ex-fully trained Inspector, is on the lecturing circuit and helped me with one. She is amazing.

I will help you and her. She is 15 minutes away from me, will come to my house and sort it out quickly.

We liaised with HMRC online and resolved it easily.

My client was really grateful. We are in the Cotswolds but operate on Zoom.

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