Transitional Tax Free Amount enquiry for specific client case
Nath
Member
Morning All
We have a client that used up 100% of his £1.25M protected LTA prior to April 2024 by taking full income option from his DB scheme and no lump sum.
He also has a £500K uncrystallised SIPP elsewhere that hasn't been touched. Under the standard calcs he obviously would have 0% left, but looking at the calculators and calculations, if he applies for the transitional certificate, he will then have £312,500 LSA available again.
Two questions on this (hopefully Les sees this 
):
- Is the understanding above correct?
- If that is the case, can the client take the full £312,500 tax free from the £500,000 SIPP if he provides them with the certificate?
The second question i'm really not sure on. The LSA would obviously be the 'max' they could take but I believe it is still limited to 25% of the value of the SIPP?
Hopefully someone can clarify the points.
Thank you
Nathan
Comments
My understanding is this is correct, and they would also have £1,250,000 LSDBA available also. However my word has less weight than others on here!
Thanks for the reply.
So do you also think he could take £312,500 from the £500,000 SIPP or that he would be limited to 25% of this? Hopefully we will also get a few more replies to really nail this down and thanks for answering.
N
Sorry, for some reason my mind completely phased over this part!
No it would just be 25% of the amount crystallised (i.e. £125,000 if they crystallise in full) - which is still better than £0!
Yes this makes sense thank you.
What @Wildparaplanner said!
Standard PCLS is lowest of of 25% of fund, LSA and LSDBA.
Perfect thank you all!!