Money Purchase Annual Allowance Calculator United Kingdom

What the money purchase annual allowance calculator does

Many people who have started taking pension income are caught out by how much less they can then pay in. This calculator compares your planned contributions with the reduced limit that applies once the MPAA has been triggered, works out any excess and prices the tax charge on it at your marginal rate.

Triggering the MPAA does more than cut the money purchase limit. It removes carry-forward from that limit and splits your allowance into two parts, one for defined contribution saving and one for defined benefit accrual, each tested separately. The calculator reports both.

What triggers the reduced allowance

The trigger is flexible access, not retirement. The most common route is taking taxable income from flexi-access drawdown for the first time. Taking an uncrystallised funds pension lump sum also triggers it, as does exceeding the limit on a pre-2015 capped drawdown arrangement or buying certain flexible annuities.

Several things that feel like taking benefits do not trigger it: taking only the tax-free cash and leaving the rest invested, buying a conventional lifetime annuity, taking a small pot lump sum under the small pots rules, and receiving a defined benefit pension. The difference is between drawing on a money purchase pot flexibly and taking benefits in a fixed form.

Once triggered, the reduction is permanent and applies across every scheme you hold, not just the one you drew from. Your scheme must notify you, and you must tell any other scheme you are still paying into.

How the two allowances work together

After the trigger, money purchase contributions, including your own, your employer’s and any tax relief added, are tested against the £10,000 MPAA alone. What is left of your annual allowance, £50,000 if it is not tapered, becomes the alternative annual allowance, which is tested against defined benefit accrual only.

For someone with no defined benefit pension, this simply means losing £50,000 of allowance, and the calculator reports that gap. Someone still building up a final salary or career average pension keeps a meaningful allowance for it, which is why the split matters more for public sector workers and long-serving employees than for most private sector savers.

Carry-forward normally lets you use unused allowance from the previous three tax years for a larger contribution in a good year. Against the MPAA it counts for nothing; it survives only against the alternative annual allowance.

For example, with the MPAA triggered, £15,000 of defined contribution payments and adjusted income of £80,000, £5,000 is over the limit. For a higher rate taxpayer the annual allowance charge is 40% of that, £2,000.

The taper on top

High earners can face both restrictions. The annual allowance tapers once adjusted income passes £260,000 (for people with threshold income above £200,000), falling by £1 for every £2 above it to a floor of £10,000. The MPAA sits on top of that.

With a heavily tapered allowance, the alternative annual allowance can shrink to very little, since it is what remains after the MPAA is taken from an already reduced figure. The calculator applies the taper first and then the split, as the rules do.

The annual allowance charge

Paying in more than the limit is allowed; the excess just loses its tax advantage. It is added to your taxable income and charged at your marginal rate, so the same over-contribution costs a basic rate taxpayer much less than an additional rate taxpayer.

The charge is meant to claw back relief that should not have been given, so usually the sensible course is to stop contributing at the limit, since money above it is locked into a pension without the tax advantage that justifies the lock. Where the excess comes from employer contributions you cannot easily decline, compare it with taking the money as salary instead.

Large charges can sometimes be paid by the scheme under the scheme pays rules, in exchange for lower benefits. That helps cash flow rather than saving money, and it applies only above a threshold, so it rarely matters for small excesses.

Planning before you trigger it

The calculator is most useful before your first flexible withdrawal. If you are still working and contributing, taking taxable income from a pension can cost far more in lost allowance than the withdrawal is worth, especially if your employer contributes substantially.

Alternatives include taking only tax-free cash, using the small pots rules for a modest pension, or drawing on other savings for a year or two until contributions stop. Timing semi-retirement so the trigger comes after your last significant contribution year keeps the full allowance while you still need it.

Reading your result

Plan around the allowance for money purchase contributions; the headroom figure shows how much room is left this year. If an excess appears, look at the charge alongside it and compare it with the value of any employer contribution causing it.

The allowance lost figure is the yearly cost of having triggered the MPAA. If you are still deciding whether to take flexible income, weigh it against the withdrawal, because it repeats every year for the rest of your working life.

All figures are an estimate based on the amounts you enter and current published allowances and rates. They do not account for scheme rules, transitional protections or your full income position, and they are not personal financial or tax advice. Confirm your allowance with your scheme or a qualified adviser before contributing.

About This Tool: Money Purchase Annual Allowance

Money purchase annual allowance: use this tool to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.