A couple of years ago my client retired and started taking his money purchase pension. With the cost of living difficulties he has had to go back to work and he wants to pay more money into his pension to provide for himself in the future. What pension contributions can be made without adverse tax consequences?

The money purchase annual allowance (MPAA) is triggered when someone when has flexibly accessed their money purchase pension. Tax relief is still due on premiums paid up to the amount of relevant earnings but exceeding the MPAA will result in an annual allowance charge.

To avoid a charge, he can contribute only up to the amount of the MPAA which for 2022/23 is £4,000 per year, though it is due to go up to £10,000 per year from 2023/24. The increase is in the current Finance Bill but the legislation has not yet received Royal Assent.

The MPAA applies when someone meets all of the conditions in FA 2004 s227ZA. These are:

• in the tax year they have flexibly accessed pension rights and all later tax years;
• the amount contributed to a defined contribution scheme exceeds the MPAA limit; and
• the MPAA would give less relief than the annual allowance (AA).

What triggers when a pension is first flexibly accessed is defined by FA 2004 s227G and is summarised in HMRC guidance PTM056520

The most commonly met trigger is going into flexi-access drawdown and then taking income. However, there are several trigger events and so these should all be checked.

Note that taking the tax-free ‘pension commencement lump sum’ is not a trigger in itself. See PTM056530 for events that do not trigger the MPAA.

Considering all of the above your client will be subject to the MPAA. This means that they will benefit from the increase from £4,000 to £10,000 a year from 2023/24 onwards (subject to Royal Assent) in contributing to a defined contribution pension without suffering an annual allowance charge at their marginal rate.

There are special rules that apply to the carry forward of unused relief in FA 2004 s228A. See HMRC’s guidance in PTM055100

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