Increase in MPAA to £10k and the £7500 recycling test.

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?


  • NoMoreNoMore Forumite
    793 Posts
    Part of the Furniture 500 Posts Name Dropper
    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 ?
  • edited 16 March at 4:37PM
    Scot_39Scot_39 Forumite
    571 Posts
    Sixth Anniversary 500 Posts Name Dropper
    edited 16 March at 4:37PM
    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.
  • Pat38493Pat38493 Forumite
    965 Posts
    Eighth Anniversary 500 Posts Name Dropper Combo Breaker
    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.
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