MPAA / voluntary scheme pays

Can anybody help with these two questions?

  1. Are there any providers that will accept a transfer in and facilitate voluntary scheme pays?
  2. How is the MPAA charge calculated?

A bit of background:

In 2018, Mrs took one of her pensions as a full lump sum in a single transaction. The value was > £10,000, so does not qualify for 'small pots'. As a result, she triggered the money purchase annual allowance (£4k).

She then made an employer pension contribution for £16k in 19/20 (whoops) and a further £8k in 2020/21, both in excess of her reduced money purchase annual allowance (£4k). As a result, she needs to pay the annual allowance tax charge by July 2021.

Her earnings for 19/20 were £50,000 (£8,000 salary and £42,000 dividend). Her earnings for 20/21 are £8,000 salary.

If she transferred to a new provider, could the new provider facilitate voluntary scheme pays, if willing? (her current pension provider will not facilitate scheme pays unless it is mandatory, which it is not).

Comments

  • richallumrichallum Administrator

    Hi Chris,

    I just did a case like this and 7IM accepted the transfer and voluntary scheme pay for previous years annual allowance  charge. I think they may look at it on a case by case basis.

    The annual allowance  excess is added on top of her other income and taxed at the marginal rate. Not sure without looking up the rules if the £4k excess in 2020/21 can use her remaining personal allowance and so be taxed at 0%.

    Paraplanner. F1, Apple, Nutella, ice cream. No trite motivational quotes. Turning a bit northern. Republican.

  • Minimum charge rate is 20% @richallum

    PTM056110

    Benjamin Fabi FPFS
    Chartered Financial Planner
Sign In or Register to comment.