Lifetime Allowance Charge and MPAA problem
TimMatthias
Member
Looking for help with this one please. All figures are rounded. With the LTA charge at 0% and any excess lump sum taxed as income, will this trigger the MPAA?
Client needs a lump sum of £75K has £600k crystallised and £300k uncrystallised, but only has unused LTA of 21.72%, so can only access £58,269 as a tax free lump sum. If he draws from the crystallised pot to make up the shortfall he will be taxed at 45% and trigger the MPAA.
If he crystallises a further £233,080 and takes the remaining 25% tax free, can he then take a taxable lump sum from the uncrystallised pot, pay the 45% tax without triggering the MPAA?
Comments
No. The only legal thing you can do with the remaining uncrystallised funds is put it in to drawdown - and the income would be taxable and trigger MPAA.
How and when did he crystallise? Might be potential to squeeze out extra PCLS come April.
Thanks Les. Was more a hope than anything else. Crystallised in Nov 2021 and December 2022.
Will need further investigation as, although the SIPP provider has given us the LTA used to date as 78.28%, the amounts crystallised were only £456K and £113.6K.
Too good to be true. Turns out there was another BCE for £264K.
Might still be a little extra LSA available after April as they vested when LTA less than £1,073,100 - depends on when that 264k was taken (and overall tax free amount)