Lifetime allowance transitional protections

Produced by Tolley in association with

Employment Tax

Guidance

STOP PRESS: This guidance note may be affected by the changes to the taxation of pensions made by FA 2024, Sch 9 from 6 April 2024 onwards. The commentary below covers the rules that apply prior to that date. Before continuing your research, see the Abolition of the lifetime allowance guidance note.

Introduction

This guidance note describes the various forms of protection against the lifetime allowance charge which have been introduced, first when the tax regime for registered pension schemes was introduced by FA 2004, and subsequently, particularly as the lifetime allowance was reduced in 2012, 2014 and 2016.

Despite the lifetime allowance charge being abolished with effect from 6 April 2023, and the lifetime allowance regime being repealed from 6 April 2024, the lifetime allowance protections discussed below remain relevant, as they enable the individual to receive a higher tax-free lump sums after 5 April 2024 compared to those without any lifetime allowance protections. See the Abolition of the lifetime allowance

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