{"id":19600,"date":"2019-08-29T11:31:08","date_gmt":"2019-08-29T11:31:08","guid":{"rendered":"https:\/\/smh.group\/?p=19600"},"modified":"2023-02-15T13:45:12","modified_gmt":"2023-02-15T13:45:12","slug":"money-purchase-annual-allowance-penalties-pick-a-number","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/money-purchase-annual-allowance-penalties-pick-a-number\/","title":{"rendered":"Money purchase annual allowance penalties \u2013 pick a number"},"content":{"rendered":"\n

A Freedom of\nInformation (FoI) request has revealed a gap in HMRC\u2019s knowledge about how many\npeople have been hit with penalties around the annual allowance. <\/strong><\/p>\n\n\n\n

The annual allowance, which effectively sets the tax-efficient ceiling on\nannual pension contributions, used to be a subject of little interest, even\namong pension professionals. When it started life in 2006 at \u00a3215,000, it was\nof limited relevance beyond a small minority of highly paid executives. <\/p>\n\n\n\n

These days the annual allowance is one of the most contentious aspects of pension legislation. The table below, using data provided under an FoI request published at the start of this year, helps to explain why. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

While the taper rules for the annual allowance have been causing many\nproblems in the public sector, for example the widely reported issues among NHS\nconsultants, there is another aspect of the annual allowance rules which has\njust had a light shone on it by the new FoI request. <\/p>\n\n\n\n

Withdrawing income <\/strong><\/p>\n\n\n\n

Since 2015\/16 there has been a reduced allowance \u2013 the money purchase\nannual allowance or MPAA\u2013 which applies, regardless of income level, as soon as\nyou first draw retirement income using pension flexibility. To enforce this,\nthe law says that within 31 days of starting flexible income, your provider\nmust supply you within a \u2018flexible access statement\u2019. You then have 13 weeks to\ninform any money purchase scheme to which you or your employer are\ncontributing. Failure to do so is subject to penalties of an initial \u00a3300 plus\nfurther amounts of up to \u00a360 a day until HMRC are notified. <\/p>\n\n\n\n

The FoI request asked a simple enough question: how many people had\nsuffered the penalties? HMRC\u2019s reply was that it did not have an answer and it\nwould be too costly for it to find out.<\/p>\n\n\n\n

Whatever you feel about that response, it is a reminder of how complex the rules for pension contributions have become, even for those who police them. The safest course of action is to seek expert advice before making any change to your pension arrangements<\/a><\/span><\/strong> to make sure you don\u2019t become an under-reported casualty. <\/p>\n\n\n\n

If you would like to discuss your pension arrangements with one of our Chartered Financial Planners<\/a><\/span><\/strong> drop us a line on 0114 266 4432 or info@smhca.co.uk<\/a><\/span><\/strong>.<\/p>\n\n\n\n

The value of your investment can go down as well as up and you may not\nget back the full amount you invested. Past performance is not a reliable\nindicator of future performance.  The\nvalue of tax reliefs depends on your individual circumstances. Tax laws can\nchange. The Financial Conduct Authority does not regulate tax advice.  <\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

A Freedom of Information (FoI) request has revealed a gap in HMRC\u2019s knowledge about how many people have been hit with penalties around the annual allowance. <\/p>\n","protected":false},"author":4,"featured_media":18042,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[350,77,11,20,97,79],"class_list":["post-19600","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-annual-allowance","tag-financial-planning","tag-hmrc","tag-income","tag-investments","tag-pension"],"acf":[],"yoast_head":"\nMoney purchase annual allowance penalties \u2013 pick a number - SMH Group<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Money purchase annual allowance penalties \u2013 pick a number - 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