Transitional Tax-Free Cash again
Nathan
Member
Morning,
We have a situation where the client has used 73.33% of his LTA via DB pensions, £75,804.78 of that was tax-free cash.
The client has LTA protection at £1.25m.
The client has an uncrystallised personal pension worth £602,000.
I was of the opinion that as the client has not used all of his Tax-Free Lump Sum allowance, which in this case I believe to be £312,500 less the tax-free cash already taken, he could take £236,692.22 of tax-free cash from the personal pension.
However, I have been told, that the client can only take additional tax-free cash, if they have it available via other schemes. As the personal pension only has £150,500 of tax-free cash available, that is the maximum he can take.
Apparently this is a common misconception behind the new rules, can anyone confirm or deny?
Thank you in advance.
Comments
I can.
You are allowed the lower of "25% of your fund" , your available LSA and your available LSDBA.
And you will need a TTFAC if you want the full tax free amount as they have inadequate LSA to cover it on the default rules.
@les_cameron I owe you many beers, thank you
See you at the BIg Day Out in September ;-)