R04 Money purchase annual allowance: free practice questions

1. Question 1 of 5

   What is the money purchase annual allowance for 2026/27?

   Option A: £60,000Option B: £40,000Option C: £10,000Option D: £4,000

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   The answer is C: £10,000

   The MPAA is £10,000. It was £4,000 from 2017/18 to 2022/23 and went back to £10,000 from 2023/24.

   Why the other options are wrong

   A

   £60,000 is the standard annual allowance.

   B

   £40,000 was the standard annual allowance until 2022/23.

   D

   £4,000 applied from 2017/18 to 2022/23.

2. Question 2 of 5

   Which of these does NOT trigger the MPAA?

   Option A: A trivial commutation lump sumOption B: The first payment from flexi-access drawdownOption C: Income from a flexible lifetime annuityOption D: Exceeding the capped drawdown maximum

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   The answer is A: A trivial commutation lump sum

   Trivial commutation and small pots lump sums don't trigger the MPAA. Flexi-access income, flexible annuity payments and breaching the capped drawdown limit do.

   Why the other options are wrong

   B

   The first flexi-access withdrawal triggers it.

   C

   Payments from a flexible annuity trigger it.

   D

   Taking more than the capped maximum triggers it.

3. Question 3 of 5

   Ray will start flexi-access drawdown income in September 2026. He has no carry forward and isn't tapered. How can he pay £60,000 into his SIPP in 2026/27 without a charge?

   Option A: He can't; the MPAA limits him to £10,000 this yearOption B: Spread it in equal monthly amounts through the tax yearOption C: Pay it all before his first drawdown paymentOption D: Pay it all after his first drawdown payment is made

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   The answer is C: Pay it all before his first drawdown payment

   Input before the trigger isn't tested against the MPAA. Paying the full £60,000 first keeps it within the standard allowance.

   Why the other options are wrong

   A

   Pre-trigger contributions use the normal allowance.

   B

   Spreading puts part of it after the trigger, exceeding £10,000.

   D

   After the trigger, DC input above £10,000 is charged.

4. Question 4 of 5

   Once the MPAA applies and DC input exceeds £10,000, what is the alternative annual allowance used for?

   Option A: Employer contributions only, of any type of schemeOption B: Any unused allowance carried forward from earlier yearsOption C: DB and cash balance input, up to £50,000Option D: Defined contribution input above the £10,000 limit

   Show answer

   The answer is C: DB and cash balance input, up to £50,000

   DC input is tested against the £10,000 MPAA; DB and cash balance input is tested against the £50,000 alternative allowance.

   Why the other options are wrong

   A

   It isn't limited to employer contributions.

   B

   Carry forward can top up the alternative allowance, but that isn't its definition.

   D

   DC input is tested against the MPAA.

5. Question 5 of 5

   Alan triggered the MPAA this year. His DC input is £4,000 and his DB input is £30,000. What happens to the £26,000 of unused annual allowance?

   Option A: It increases next year's MPAA from £10,000 to £36,000Option B: It is lost altogether because the MPAA now applies to himOption C: It can be carried forward to increase future DC contributionsOption D: It can be carried forward, but only for future DB input

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   The answer is D: It can be carried forward, but only for future DB input

   With DC input under £10,000, all input is tested against £60,000. Unused allowance can be carried forward, but only against DB input.

   Why the other options are wrong

   A

   The MPAA can never exceed £10,000.

   B

   It isn't lost; it can support DB accrual later.

   C

   It can't increase DC input above the MPAA.

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