News Archive - March 2017
Pension changes for the new tax year
From 6 April the Money Purchase Annual Allowance (MPAA) will reduce from £10,000 to £4,000. "What is the Money Purchase Annual Allowance?", I hear you cry.
The MPAA limits the amount that you can pay into a money purchase pension (like a personal pension or an auto-enrolment scheme). If you exceed this amount then tax penalties will apply.
The MPAA applies to those over 55 who have started to access their pension pot flexibly. This means those who have taken a taxable payment from a pension using Flexi-Access Drawdown, and those who have fully or partially encashed a pension using UFPLS (Uncrystallised Funds Pension Lump Sum). Things that do NOT trigger the MPAA are full encashments under the Small Pots rule (this can be requested for pots of under £10,000), or tax-free cash withdrawals taken without any taxable income.
In pracice, most people do not want to continue paying into a pension once they have started to draw their pension benefits. However, if a person decides to "cash in" a small pension early, then the MPAA may adversely limit their pension contributions in the future if they continue to work. It's best to keep your options open.
Contact Mulberry Financial if you need help with your pension planning.
The material here is for general information only and is not intended to be relied upon for individual investment decisions. Appropriate independent advice should be obtained before making any such decisions. Mulberry Financial Ltd does not accept any liability for any loss suffered by any user as a result of any such decision.
The information is based on our understanding of current HMRC rules and practices (as at the news article date) which are always subject to change. Taxation and trust advice and Cash ISAs are not regulated by the Financial Conduct Authority. This site is aimed at UK residents only.
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