Register with PP

Newsletter, Jobs & Event Alerts


MPAA fines not recorded by HMRC

22 July 2019

The number of people fined for breaching the Money Purchase Annual Allowance has not been recorded by HM Revenue & Customs, it has been revealed. 

In a freedom of information request made by Royal London, HM Revenue & Customs admitted that it had no idea how many people are being fined each year for going over the limit.

Under current rules, most people are allowed to contribute up to £40,000 per year into a pension and get tax relief on their contributions. However, since the introduction of pension freedoms in 2015, a reduced contribution limit has applied to people who start to take chunks of taxable cash from a pension using the new legislation.

The limit – the Money Purchase Annual Allowance – was reduced from £10,000 to £4,000 in 2017 in a bid to discourage people from ‘recycling’ money in and out of pensions.

Under the current system, when an individual withdraws a chunk of taxable cash from one pension, their pension provider is expected to notify them that they have triggered the MPAA. The individual then has three months to inform their active pension scheme. If they fail to so do, they will receive a fixed penalty of £300, followed by an escalating daily fine of £60.

Steve Webb, director of policy, Royal London, said: “It is truly astonishing that HMRC are presumably fining people for not complying with complex regulation but do not even bother to keep track of how many people they are fining. HMRC would take a dim view of any taxpayer who did not keep proper records, yet they appear not to have a clue about their own actions.

“If large numbers of people are being fined for non-compliance then we need to know so that more can be done to alert customers as to their responsibilities under the law.  Even if HMRC have no historic information, they should, at the very least, start to keep records now.”

In response to Royal London, HM Revenue & Customs said finding out the numbers of people fined would be disproportionately expensive, as it would take more than three days of work to obtain the information.

Do NOT follow this link or you will be banned from the site!