Follow up questions from today's Online Assembly on lifetime allowance

richallum

We ran out of time today but @les_cameron has offered to answer the questions that were submitted so here they are....

1. wasn't there an update to the update about DB tax free cash in excess of the LTA limits?
2. can you crystallise as excess (over LTA fund), not draw it and not pay income tax nor LTA tax?
3. How will the abolition of the LTA charge benefit high earners working here from outside the UK. Will they be able to avoid a lump sum charge if they take their pension if and when returning to their native country?
4. We have a client with Enhanced Cert 2008 that says fund and lump sum protection but no % specified. Spoke to HMRC and he can have all his fund as tax free cash
5. I'm writing a report for a client who is already over the current LTA with no protection. He is not likely to need to use his pensions for some years yet. Just wondering how best to cover the potential LTA implications for the future? Is it a crystal ball situation? Other than recommending protection so he can max his TFC? And adding that it could all be changed if there's a change in government?
6. On the PCLS. I have a client who took a PCLS payment of £156,600 from his Defined Benefit pension when he took benefits in 2013/14 tax year. The total amount of LTA used was 41.76%. The client has a money purchase scheme, and we are looking to take the TFC from the pension. Pension is currently valued at £547k. Can he take 25% of this value in tax free cash?
7. Does though suggest that crystallising is 100% essential pre election??
8. Back to 100% crystallisation/designate issue - I dont fancy the risk of them dropping a sudden overnighter the day after the election...and while its mid tax year i think its easier to change the rules for that entire year...surely acting this tax year is safer?

les_cameron

1. Best post a fuller question but nothing ringing a bell here

les_cameron

2 Yes you can

les_cameron

3. Quite wide ranging but they could transfer there pension out overseas in 23/24 - No LTA charge. 24/25 will need to see what HMRC are planning to do.

les_cameron

4 Whomever you spoke to at HMRC is wrong. If there is no TFC quoted on an enhanced protection certificate the max is 25% of available LTA based on a £1.5m LTA. I would check the protection was applied for correctly as lots of mistakes were made around TFC entitlement at 5/4/06 when there was a mixture of vested and unvested funds (the form wasn't very clear)

les_cameron

5 you'll need to come up with that I think. They could consider putting all the money in drawdown so that if the LTA returns you only need to deal with the growth. And they could contribute more before doing so. It's a hard one to answer.

les_cameron

6. The lower of 25% of 58.24 of the LTA and 25% of fund value.

les_cameron

7 My view is it may well be a way t mitigate the risk of a reintroduction of the LTA. But you need to consider any PCLS paid out if you need to take benefits to get at your excess.

les_cameron

8 You can't just drop an overnighter you have to make a fiscal statement so I think you're safe. If your adviser thinks it isn't do it this tax year! With the downside of more growth to manage than if you delayed (if LTA reintroduced)

richallum

Thanks @les_cameron