What is the Money Purchase Annual Allowance (MPAA)?

The Money Purchase Annual Allowance (MPAA) is a reduced annual allowance that applies to money purchase (defined contribution) pension contributions once you have flexibly accessed a pension. For 2026/27 the MPAA is £10,000. This means once triggered, you can only contribute up to £10,000 per year to defined contribution pensions (combining employer and employee contributions) without incurring a tax charge. The remaining standard annual allowance (£60,000 minus £10,000 = £50,000) can still be used for defined benefit pension accrual.

What triggers the MPAA?

The MPAA is triggered when you flexibly access a money purchase pension. Trigger events include: taking income from a flexi-access drawdown fund (FADF), receiving an annuity with certain flexible features, taking an uncrystallised funds pension lump sum (UFPLS), and some overseas pension events. Taking a tax-free cash lump sum (PCLS) alone does not trigger the MPAA — it is only triggered by taking flexible income. Taking a small pots lump sum (pots under £10,000) does not trigger the MPAA. The MPAA is not triggered by taking benefits from a defined benefit (final salary) scheme.

Can I use carry forward with the MPAA?

No. Carry forward cannot be used to increase the Money Purchase Annual Allowance beyond £10,000. Carry forward allows use of unused annual allowance from the previous three tax years — but this only applies to the standard annual allowance (£60,000). If you have triggered the MPAA, you cannot carry forward unused allowance to contribute more than £10,000 to defined contribution pensions. However, carry forward can still be used for defined benefit pension accrual above the DB alternative annual allowance of £50,000.

What is the alternative annual allowance for DB pensions after MPAA is triggered?

Once the MPAA is triggered, the annual allowance is effectively split: £10,000 for money purchase pensions and £50,000 for defined benefit pension accrual. This is known as the 'alternative annual allowance' (AAA) for DB. The total across both types cannot exceed £60,000 (the standard annual allowance). If you are both actively accruing DB benefits and contributing to a DC pension after triggering the MPAA, you must check both the £10,000 MP limit and the £50,000 DB alternative limit do not breach these caps.

How do I report an MPAA breach to HMRC?

If your money purchase contributions exceed the £10,000 MPAA, you must report this on your self-assessment tax return. The excess is subject to an annual allowance charge, which is added to your income tax bill at your marginal rate (20%, 40% or 45%). You must also notify your pension provider that you have triggered the MPAA — they are required to inform new pension providers when you transfer. Failure to report can result in penalties and interest. HMRC publishes detailed guidance on MPAA reporting on the gov.uk website.

Does salary sacrifice trigger the MPAA?

No. Making pension contributions through salary sacrifice does not trigger the MPAA. The MPAA is only triggered by flexibly accessing (taking money out of) a pension, not by contributing to one. Salary sacrifice is an employer contribution arrangement and does not constitute flexible access. However, once you have triggered the MPAA through flexible access, salary sacrifice contributions still count towards the £10,000 MPAA limit alongside all other employer and employee money purchase contributions.

Money Purchase Annual Allowance Calculator 2026/27

Last updated: March 2026

MPAA Calculator 2026/27

Calculate your money purchase pension contribution allowance and check for any annual allowance tax charge

Have You Flexibly Accessed a Pension? Taking tax-free cash only does NOT trigger the MPAA

Annual Employer Contributions (£)

Annual Employee Contributions (£)

Other Money Purchase Contributions (£) SIPP contributions, third-party contributions

Annual Earnings (£) Used to calculate earnings-based limit

MPAA Annual Allowance Position 2026/27

Money Purchase Allowance Status

—

Total Money Purchase Contributions: £0

MPAA Limit (2026/27): £10,000

MPAA Remaining: £10,000

Annual Allowance Split

Money Purchase Annual Allowance: £10,000

DB Alternative Annual Allowance: £50,000

Total Annual Allowance (2026/27): £60,000

Tax Charge on Excess (if any): £0

Result will appear after calculation.

MPAA Rules 2026/27 — What You Need to Know

Allowance Type	2026/27 Limit	Notes
Standard Annual Allowance	£60,000	For those who have NOT triggered MPAA
Money Purchase AA (MPAA)	£10,000	For DC contributions after flexible access
DB Alternative Annual Allowance	£50,000	For DB accrual after MPAA triggered
Tapered Annual Allowance	£10,000 min	For adjusted income over £260,000

MPAA Trigger Events — Full List

The MPAA is triggered on the date you first flexibly access a money purchase pension. The following are trigger events:

Flexi-access drawdown income: Taking any income from a flexi-access drawdown fund (FADF) — even £1
UFPLS (Uncrystallised Fund Pension Lump Sum): Taking a lump sum directly from an uncrystallised DC fund where 25% is tax-free and 75% taxable
Flexible annuity: Purchasing an annuity that can decrease (other than through value protection or guaranteed period payments)
Scheme pension from a DC fund: Where the pension can be reduced (rare)

What Does NOT Trigger the MPAA

Taking a tax-free cash lump sum (Pension Commencement Lump Sum / PCLS) alone
Entering drawdown without taking any income
Purchasing a standard level or escalating lifetime annuity
Taking small pots (under £10,000 from up to 3 personal pension pots or unlimited occupational schemes)
Taking DB/final salary pension benefits (defined benefit triggers only affect DB alternative annual allowance, not MPAA)
Death benefits paid to a beneficiary

Pension Input Periods

The pension input period (PIP) for annual allowance purposes runs from 6 April to 5 April (aligned with the tax year since 2015/16). All money purchase contributions — employer, employee, salary sacrifice, third-party — made during this period count towards the MPAA. The MPAA applies from the date of trigger; contributions before the trigger date in the same tax year do not count against the MPAA.

Worked Examples: MPAA in Practice

Example 1: MPAA Triggered — Within Limit

Triggered MPAA in 2024 by taking drawdown income from a SIPP
2026/27 employer contributions: £3,000
2026/27 employee contributions: £4,000
Total money purchase contributions: £7,000
MPAA limit: £10,000
Remaining MPAA: £3,000 — no tax charge
Can also accrue DB benefits up to £50,000 alternative annual allowance

Example 2: MPAA Exceeded — Tax Charge Applies

Triggered MPAA in previous tax year
2026/27 employer contributions: £8,000
2026/27 employee contributions: £6,000
Total money purchase contributions: £14,000
MPAA limit: £10,000
Excess above MPAA: £4,000
Tax charge at 40% (higher rate taxpayer): £1,600 payable via self-assessment
Action required: Reduce future contributions or report via self-assessment

Example 3: MPAA Not Triggered — Standard Allowance Applies

Took tax-free cash from pension but no drawdown income
MPAA has NOT been triggered
Full £60,000 annual allowance applies (or 100% of earnings if lower)
Employer contributions: £15,000
Employee contributions: £20,000
Total: £35,000 — well within standard £60,000 limit

Reporting MPAA Breaches and HMRC Requirements

If your money purchase contributions exceed the £10,000 MPAA in any tax year, you must:

Report on self-assessment: Complete box 10.1 of the pension savings annual allowance charge pages (SA101)
Notify your scheme: Inform any new pension provider that you have triggered the MPAA — they must pass this information to receiving schemes on transfer
Pay the tax charge: Annual allowance charges are added to your income tax liability and payable by 31 January following the tax year
Scheme pays (if eligible): If your annual allowance charge is £2,000 or more and total pension savings exceed the annual allowance by £2,000+, you may be able to ask your pension scheme to pay the charge from your fund (reducing future pension)

Important: HMRC requires pension schemes to automatically notify members of their pension savings statement each year if contributions exceed the annual allowance. However, it is your responsibility to report MPAA breaches via self-assessment.

Sources & Official References

Disclaimer: This calculator provides an estimate based on 2026/27 MPAA limits. Individual circumstances, including tapering for high earners, carry forward and scheme-specific rules, may affect your position. Consult a qualified pension adviser or tax professional before making contribution decisions.

Official Data Source: MPAA limits from HMRC Money Purchase Annual Allowance guidance. Last verified March 2026.

UK Calculator Editorial Team

Our pension calculators are maintained by qualified financial analysts. All tools use official HMRC data. Learn more about our team.

Money Purchase Annual Allowance (MPAA) Calculator