MPAA reduced to £4,000
In our blog post dated 26th May 2017, we wrote that the Conservatives made a U Turn on their plans to reduce the Money Purchase Annual Allowance (MPAA) to £4,000 and removed it from the Finance Bill 2017 so the bill received Royal Assent prior to the election. Now the election has passed with the Conservatives winning by a minority, Philip Hammond has announced that they will reintroduce the reduction from £10,000 to £4,000 in the form of the Finance Bill 2 which would legislate the policies that had already been announced. The reduction of the MPAA will be backdated and will take effect from 6th April 2017 meaning that anyone who has paid contributions over £4,000 into their pension arrangement already this tax year will occur a tax charge.
Hartley Pensions do not feel that the reduction in the MPAA is required. The previous £10,000 limit was in place to close loopholes that the pension freedoms created. An industry consultation was completed which showed very little support for the idea but it was still brought in. By stating it will be backdated when it is far from being law is unfair to the consumer.