Increase in MPAA to £10k and the £7500 recycling test. 15 March at 9:30PM in Pensions, annuities & retirement planning 3 replies 381 views

pensionpawn

So, from the new tax year the amount you can add to your pension, after triggering MPAA, has moved from below the £7500 recycling test level to above it. Now I appreciate that there are other tests, mostly percentage based, that determine whether planned recycling has occurred however in the short time since the Budget I have not seen any reference to the recycling rules also being amended. Any thoughts on bumping up your contributions from £4k to £10k (exceeding the current 30% test) whilst accessing your pot? If the rules haven't changed I'm assuming that in order for the £6k extra contributions not to fall foul of the 30% of received TFLS rule, you will have to have taken in excess of £20k?

NoMore

The MPAA was originally 10k so not sure if this is any different, did the rules on recycling change at the same time as MPAA went to 4k ?

Scot_39

The recycling test level you refer to I believe - the £7500 - is on the PCLS threshold trigger for checks to occur at all - not the increase in contribution.  So essentially you can lift 7.5k every 12months - and do as you want with contributions regardless (including arguably legally if not morally - recycle every penny of it)

The contribution threshold is 30% of historic contribution and/or 30% cummulative of lump sum - and all tests - depending on the proof of pre planning intent.

There are several other exemptions - like a change in employers - and higher new scheme levels of contributions.

I would expect anyone previously constrained by the MPAA - who then lifts - would have a reasonable argument - and would hope the general exclusions list - when it wouldn't be applied would be modified in due course.

But - as it's targetted to bring people back - and we are talking about the govt - and new scheme contributions at standard levels already an exclusion - I wouldn't like to guarantee that will happen explicitly - certainly not immediately.

And it's not exactly like pension companies are reporting mass enforcement.

And the LTA change - is being done in 2 stages itself - the charges are being zeored from Apr 23 - but the law establishing it - is not being changed by then - target by Apr 24.


Edit - and reading elsewhere - that will likely set the same 25% tax free cap ( and not a reduced or unlimited one ).  It's just removing the supertax extra on rates when lift.

So possibly they will adjust other regulations like the one on recycling - on a similar timescale.

Pat38493

The recycling rules and guidelines are also a bit ambiguous in the wording and according to other threads here, nobody can find any real world examples of a penalty being imposed and there have never been any test cases about it so there seems to be some grey areas that have certainly never been tested in court.