Money Purchase Annual Allowance relevance for non UK Resident’s Pension contributions post draw

I left the UK over 10 years ago and do not intend to move back. I have been contributing to a UK company pension scheme during all this time and I also have a UK SIPP. I have not been getting UK tax relief on these contributions as I have not had any UK earnings. I intend to draw down my UK SIPP fully in May 2024 in one lump sum (I will not be subject to UK tax on this due to the relevant tax treaty in force). After I have fully drawn down my UK SIPP, I would like to continue to contribute at the same level as before to my employer’s UK company pension scheme. I am aware of the MPAA GBP10,000 that is triggered by a pension drawdown. Does this apply in situations where no tax relief is being obtained? Eg my contributions together with my employer were GBP15,000, I would like to continue at this level. Will the GBP5,000 over the ‘MPAA’ GBP10,000 be subject to the annual allowance charge even though I am not UK tax resident and not claiming tax relief in the UK?

Hi

Yes as it applies to all pension inputs. Please see guidance at The money purchase annual allowance

Thank you

Thanks for your response. Your response in effect states that the MPAA limit of GBP10,000 pa would apply, even though I am non-resident and not claiming tax relief, and any contributions in excess of that amount would be chargeable to tax. However, I have been monitoring similar questions on the Forum and came across an answer provided to Clarky55 by HMRC Admin 19 which provides a different answer on basically the same question. The thread is titled “Relevance of annual allowance and MPAA to non-residents contributing in to UK pension schemes”. HMRC Admin 19 states that: “Money Purchase Annual Allowance (MPAA) would not apply, as the contributions are not eligible for relief.” Could you confirm which of the replies is correct, and if possible the relevant law/guidance on this. Thanks

Hi Pines12345

The individual did not meet the criteris for tax relief to be allowed, as they were not a relevant UK individual.  Please see Abolition of Lifetime Allowance and increases to Pension Tax Limits

Thank you

Hi, Therefore, can you confirm: if an individual is not a ‘relevant UK individual’ and more than GBP10k contributions are paid into their UK pension in a tax year (after a drawdown) that the excess over GBP10k will not be chargeable to tax? regards

Hi,

You can see guidance here:

What you’ll need

Thank you.

Thank you for the response and the link. The MPAA provisions were put in place to prevent pension recycling ie situations where pension drawdowns are recycled back into a pension obtaining further tax relief. Therefore, to reiterate my question: For non-”relevant UK individuals”, who by definition cannot obtain tax relief in the UK, do contributions in excess of GBP10,000 still attract a tax charge after drawdown? (Note the calculator you referred me to does not take into account if the individual is obtaining tax relief for the pension savings or not - hence did not answer my question).

Hi Pines12345,
Please refer to guidance at Pensions Tax Manual.
Thank you.