MPAA - Informing HMRC?

zudecke

Hi guys,

My dad took out a bulk payment from his HL pension account of ~£15k to pay for dental surgery.

HL notified him of activation of MPAA (which I have very little understanding of) and that he needs to notify HMRC.

He has never submitted a Self Assessment tax return and nor would he be eager to do so anytime soon (unless he had to). As he doesn't nor has he ever had any other income beyond his PAYE.

Does anyone know what he needs to do here?

Many thanks,

Nick

xylophone

HL notified him of activation of MPAA (which I have very little understanding of) and that he needs to notify HMRC.

https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/money-purchase-annual-allowance/

As your father has accessed more than the tax free lump sum from his HL pension, he is now restricted as to the amount he can contribute to a DC pension arrangement to a gross £4000.

https://citywire.co.uk/new-model-adviser/news/hmrc-doesnt-know-how-many-people-face-mpaa-fines/a1252168

Does your father intend to continue to make pension contributions?

https://www.gov.uk/guidance/work-out-your-allowances-if-youve-flexibly-accessed-your-pension

zudecke

"Does your father intend to continue to make pension contributions?" - Yes, he is still actively contributing to his scheme.

Bloody confusing, but thank you a million nonetheless.

In short, does he have to let HMRC know and if so, how?

SonOf

He does not need to notify HMRC because of the MPAA. However, he will need to mention it any time he contributes to a pension in the future.

He only has to contact HMRC if the tax paid on the lump sum is too high and he wants the refund now rather than later.

Thrugelmir

zudecke wrote: »

In short, does he have to let HMRC know and if so, how?

Self Assessment

https://www.gov.uk/guidance/work-out-your-allowances-if-youve-flexibly-accessed-your-pension

Brynsam

Hopefully HL also pointed out to him that he needs to notify any other defined contribution (aka money purchase) pension scheme which he, his employer or any other third party is paying into on his behalf within 91 days.

If the scheme to which he is actively contributing is a defined benefit (final salary or CARE) scheme, no need to notify. The £4K limit only applies to defined contribution arrangements.

xylophone

If the scheme to which he is actively contributing is a defined benefit (final salary or CARE) scheme, no need to notify. The £4K limit only applies to defined contribution arrangements.

But note the guidance re DB arrangements in RL link above.