Cash withdrawal from pension and MPAA

[Apostrophe]

Hello, I've been using the forum 'read only' for a while, but finally got round to registering and posting.

Does anyone here know much about pensions, specifically how the MPAA (Money Purchase Annual Allowance) works?

I'm new to contracting but oldish (over 55) and am finding it hard to get some clarification on this.

For example:
If I pay £40,000 from my limited company into a personal pension on March 1st 2017, because I am old I can then withdraw cash from the pension. So if I was to then withdraw £30,000 on March 31st 2017, the first 25% of the withdrawal would be tax free and the remainder taxed as income at my marginal rate.

I think, and this is what I am trying to clarify, that the cash withdrawal will lead to my MPAA being reduced to £10,000 for the 2017/18 tax year.

Is that right? If I did this would I have any tax penalty to pay in the current tax year? Would my MPAA return to normal (£40,000) in the 2018/19 tax year?

Thanks

[northernladuk]

This page has a pretty clear example as to how it works and should answer your question although I'd be seeking advice from an IFA personally.

https://www.aegon.co.uk/news/news-ar...allowance.html
Check the pull down about how it works in practice

[Fred Bloggs]

OP, you need to look carefully at the different types of draw down. From what you say, I think capped draw down would be your best bet. I recommend you look at the free guides from Hargreaves Lansdown, they explain it all in layman's terms and in detail.