Money Purchase Annual Allowance (MPAA)
A reduced annual allowance of £10,000 that applies once you've flexibly accessed your pension, limiting future tax-relieved contributions.
Key Points
- ✓Key aspect of the UK pensions system
- ✓Understanding this helps optimize your tax position
- ✓Use Calcedia calculators to see the impact on your finances
- ✓Consult HMRC guidance for official information
Detailed Explanation
Money Purchase Annual Allowance (MPAA) is an important concept in the UK pensions system. Understanding it helps you better manage your finances, optimize your tax position, and make informed decisions about your employment and benefits.
This term relates to how your retirement savings are managed.
For a more comprehensive understanding of how this affects your specific situation, consider using our free UK salary calculator to see the real impact on your take-home pay.
Practical Examples
- •Use our take-home pay calculator to see how money purchase annual allowance (mpaa) affects your salary directly.
- •The exact impact depends on your personal circumstances including your income level, tax code, and other factors.
Frequently Asked Questions
Related Terms
Annual Allowance
The maximum amount you can contribute to your pension each year and still receive tax relief (currently £60,000).
Pension Contribution
Money paid into your pension pot, receiving tax relief at your marginal rate (20%, 40%, or 45%), up to the annual allowance.
Auto-Enrolment
Automatic enrollment of eligible employees into a workplace pension scheme, with minimum contributions from both employer and employee.
Salary Sacrifice
An arrangement where you give up part of your salary in exchange for a non-cash benefit (e.g., extra pension), saving tax and NI.