Guidance

Lifetime allowance (LTA) abolition ― frequently asked questions

Published 25 April 2024

Lifetime allowance (LTA) abolition ― frequently asked questions

Question 1 — Lump sum death benefits are excluded for the purposes of the tapered annual allowance, does this also apply to lump sums?

No. The exclusion from the tapered annual allowance applies only to lump sum death benefits and not to other lump sums taxed as pension income. This is because it is not the choice of the beneficiary to receive a lump sum death benefit.

Question 2 — How do pensions schemes determine the order in which relevant benefit crystallisation events (RBCEs) have occurred?

Section 637S(8) sets out the order in which RBCEs occur if these events consist of more than one lump sum death benefit in respect of an individual.

In other circumstances, it will be up to the member to decide on the order of their RBCEs, for instance where more than one pension commencement lump sum or uncrystallised funds lump sum occur on the same day. This is covered by Pensions Tax Manual guidance covering relevant benefit crystallisation events.

Small lump sums

Question 3 — Is available lump sum allowance required for small lump sums, as well as the winding-up lump sum and trivial commutation lump sum?

No. Available lump sum allowance will only be required for winding-up lump sums and trivial commutation lump sums.

Question 4 — Where there is a requirement to have available lump sum allowance for a winding-up lump sum, or trivial commutation lump sum to be paid, does the available allowance need to cover the entirety of the payment?

No. The individual only needs to have some available allowance.

Question 5 — Will the legislation for trivial commutation lump sums (TCLS) be amended to ensure that pre-A Day rights are not double counted in calculating the commutation limit?

Yes. This was achieved by regulation 3(12) of The Pensions (Abolition of lifetime allowance charge) Regulations 2024.

Question 6 — Given the payment of a trivial lump sum still requires LTA, will this be amended?

Yes. We will be bringing forward consequential changes to Article 23C of the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (SI 2006/572) to ensure that trivial lump sums can still be paid after 6 April 2024.

Rather than requiring available LTA, members will require available lump sum allowance in order to be paid a trivial lump sum. This change will be introduced via a further set of regulations.

Uncrystallised funds pension lump sum (UFPLS)

Question 7 — Can an UFPLS now be paid to members aged over 75?

Yes. Because there is no test of pension savings against the new allowances at age 75, members will be able to be paid an UFPLS after age 75, provided the payment meets all other eligibility criteria.

Question 8 — Can an UFPLS be paid which is entirely taxable?

Yes. An individual does not need available allowances to be paid an UFPLS, as their available allowances determine only the tax treatment of the lump sum paid. Therefore, an UFPLS can be paid when an individual has no available allowances remaining and would be entirely taxable at the individual’s marginal rate.

Pension commencement excess lump sum (PCELS)

Question 9 — How does the permitted maximum for PCELS operate?

Regulation 3(10) of the Pensions (Abolition of lifetime allowance charge) Regulations 2024 removes the ‘permitted maximum’ for the PCELS will be removed from legislation. This amendment will mean that a lump sum will not be tested against a member’s remaining lump sum and death benefit allowance to determine whether it can be paid as a PCELS.

Question 10 — What are the conditions for paying a PCELS?

As set out at Schedule 29 to Finance Act 2004, the conditions are that:

• the member becomes entitled to it in connection with becoming entitled to a relevant pension
• it is paid when none of the member’s lump sum allowance or when none of the member’s lump sum and death benefit allowance is available
• it is paid within the period beginning six months before, and ending one year after, the day on which the member becomes entitled to it
• it does not reduce the rate of payment of any pension to which the member has become (actually) entitled, or extinguish the member’s entitlement to payment of any such pension
• it is paid when the member has reached normal minimum pension age (NMPA) (or the ill-health condition is met)
• it is not an excluded lump sum

Question 11 — Will it be compulsory to offer a PCELS?

No. it will not be compulsory for schemes to offer the PCELS. Schemes are not required to pay any of the authorised lump sums under Finance Act 2004. Pension tax legislation sets out what schemes can pay and the tax treatment of these payments.

Where schemes do wish to offer the PCELS and cannot amend their rules in time for April 2024, paragraph 132 of schedule 9 to Finance Act 2024 (amended by regulation 4(23)(b) of The Pensions (Abolition of lifetime allowance charge) Regulations 2024) provides a transitional provision, allowing references to the lifetime allowance excess lump sum (LTAELS) to be read as references to a PCELS.

Question 12 — Will the pension commencement excess lump sum (PCELS) be payable by occupational pension schemes?

Yes. Regulation 12 of The Pensions (Abolition of lifetime allowance charge etc) Regulations 2024 amends the Occupational Pension Schemes (Assignment, Forfeiture and Bankruptcy) Regulations 1997 to ensure that a PCELS is payable by occupational pension schemes.

To clarify, the PCELS will also remain payable by non-occupational pension schemes.

Question 13 — Can a PCELS be paid by defined benefit and defined contribution schemes? 

The amended legislation for the PCELS does not limit its payment to individuals who are members of particular arrangements. However, a PCELS cannot be paid where another authorised lump sum could instead be paid. Therefore, if the individual could be paid an UFPLS under tax legislation, they cannot be paid a PCELS. This means that, where an individual can be paid an UFPLS under section 166 of Finance Act 2004, even if their particular scheme rules do not permit the payment of an UFPLS, they cannot be paid a PCELS.

Question 14 — Will there be a minimum level of related pension in connection with which a PCELS can be paid? 

No. Although the payment of a PCELS is tied to an individual becoming entitled to a relevant pension, there is no minimum level of pension specified in legislation. However, an individual must have exhausted their lump sum allowance or lump sum and death benefit allowance to be paid a PCELS. As a result, they must have taken at least £1,073,100 of pension benefits.

Question 15 — Does payment of a PCELS trigger the money purchase annual allowance?  

No, payment of a PCELS does not trigger the money purchase annual allowance.

Question 16 — Can a lifetime allowance excess lump sum be paid after 6 April 2024 where an individual’s entitlement to that lump sum arose before this date?

Yes. Where a lump sum to which a member became entitled before 6 April 2024 is paid after this date, the amendments made by Schedule 9 to Finance Act 2024 should be disregarded for the purposes of determining whether that lump sum is payable under section 166 of Finance Act 2004, as well as for determining the tax treatment of that lump sum.

This means that an LTAELS to which a member became entitled before 6 April 2024 can be paid on or after this date.

Lump sum death benefits from pre-6 April 2024 crystallised funds

Question 17 — Are all lump sum death benefits paid from funds which crystallised before 6 April 2024 free from income tax, or just the first payment of death benefits?

Any lump sums death benefits paid from funds which crystallised before 6 April 2024 have been tested against the LTA. They will therefore not be tested against the lump sum and death benefit allowance, or any excess over the allowance taxed, if paid 6 April 2024.

Read question 19, which clarifies that further regulations will ensure this outcome is achieved.

Question 18 — Will lump sum death benefits paid in respect of a deceased dependant, nominee or successor be tested against their available allowance if these funds crystallised prior to 6 April 2024? 

No. As with payments in respect of a deceased original member, where a lump sum death benefit is paid in respect of a deceased dependant, nominee or successor from funds which crystallised prior to 6 April 2024, paragraph 131 of Finance Act 2024 provides that these funds are not retested against an individual’s lump sum allowance. This is because they would have already been tested against the LTA.

Question 19 — Will a lump sum death benefit paid from funds which crystallised prior to 6 April 2024 reduce an individual’s lump sum and death benefit allowance?

No. Paragraph 131 of schedule 9 to Finance Act 2024 excludes any amount of a lump sum death benefit that is paid from funds that crystallised prior to 6 April 2024.

The result of this is that the adjusted figure applies for the purposes of section 637S (availability of an individual’s lump sum and death benefit allowance), and therefore for sections 637H to 637M of Chapter 15A to ITEPA 2003.

Question 20 — Will a lump sum death benefit paid from funds which crystallised prior to 6 April 2024 still be limited by the permitted maximum at sections 637H to 637M of Chapter 15A ITEPA 2003?

Whilst the legislation operates to ensure that lump sum death benefits paid from funds which crystallised prior to 6 April 2024 will not reduce an individual’s lump sum and death benefits allowance, currently the permitted maximum could still limit the tax-free amount that can be paid. This is not intentional.

The policy is that lump sum death benefits paid from such funds would be tax-free because these funds have already been tested against the LTA. Further legislation will be brought forward, through regulations, to make sure that the correct policy outcome is achieved.

Question 21 — If a member transfers to a new provider after 6 April 2024, including funds which crystallised prior to this date, how will the receiving scheme know what part of a lump sum death benefit should not be subject to taxation, due to paragraph 131 of Finance Act 2024?

The government will bring forward legislation to require the scheme making the transfer to provide the receiving scheme, with information about how much of any funds crystallised before and after 6 April 2024.

Lump sum death benefits paid in respect of dependants, nominees and successors

Question 22 — Whose allowance will lump sum death benefits paid in respect of dependants, nominees or successors be tested against?

Where lump sum death benefits are paid in respect of a deceased dependant, nominee or successor, these will be tested against the dependant’s, nominee’s or successor’s available lump sum and death benefit allowance.

The benefit will not be tested against the original member’s or beneficiaries’ allowance.

It is also the age and date of death of the dependant, nominee or successor that will be relevant for the tax treatment of the lump sum death benefit paid.

This is provided for by sections 637L(7) and 637M(7) of new Chapter 15A of ITEPA 2003, which states that references to ‘member’ in these sections are to be read as references to the dependant, nominee, or successor.

For clarity, where the lump sum death benefit is paid from funds which crystallised before 6 April 2024, these are not tested against any allowance.

Question 23 — Why will lump sum death benefits paid from dependents’, nominees’ or successors’ drawdown be tested against these individuals’ available allowance when it had been confirmed that lump sum death benefits will not be tested against a beneficiary’s allowance? 

Lump sum death benefits will not be tested against a beneficiary’s allowance. However, a lump sum death benefit paid from a dependant’s, nominee’s or successors’ drawdown will be tested against the dependant’s, nominee’s or successors’ available lump sum and death benefit allowance. This is because, in such circumstances, the dependant, nominee or successor is not the beneficiary of that payment. They are treated as if they were the original member.

This is not the case under the LTA because the payment of a flexi-access drawdown fund lump sum death benefit or a drawdown pension fund lump sum death benefit were not BCEs. The funds from which the lump sum death benefit was paid would already have been tested against the original member’s LTA when they crystallised these funds during their lifetime. 

From 6 April 2024, it is necessary for the payment of these lump sum death benefits to be relevant BCEs in order to ensure that unlimited amounts cannot be paid free from income tax. In the case that they are paid on the death of a dependant, nominee or successor, it is that individual’s available allowance that the lump sum death benefit should be tested against, and not the available allowance of the original member.

Lump sum death benefits paid to non-qualifying persons

Question 24 — What is the tax treatment of lump sum death benefits, paid in excess of the deceased member’s available allowance, where the payment is to non-qualifying persons?

If the lump sum is paid within the relevant 2 year period, then the excess over the deceased member’s available lump sum and death benefit allowance is taxed as pension income. For non-qualifying persons who are not subject to the higher or additional rates of income tax, this will be basic rate tax (or the trust rate if applicable).

If the lump sum is not paid before the end of the relevant 2 year period, then the whole of the lump sum is subject to the special lump sum death benefit charge.

This 2 year rule does not apply to pension protection lump sum death benefits or annuity protection lump sum death benefits, consistent with their treatment before 6 April 2024.

Protections and enhancement factors — scheme-specific lump sum protection

Question 25 — Where an individual has scheme-specific lump sum protection and takes a commencement lump sum, how does this reduce their available lump sum allowance and lump sum and death benefit allowance?

Their lump sum and death benefit allowance will be reduced by the full amount of the lump sum paid. This is the effect achieved by Finance Act 2024.

Their lump sum allowance should be reduced by 25% of the lump sum paid plus the relevant pension in connection with which the member became entitled to that lump sum.

For instance, if the member was paid a lump sum of £200,000 and became entitled to a relevant pension of £200,000, their lump sum allowance should be reduced by £100,000: 0.25 × (£200,000 + £200,000).

This is not the effect of the changes published as part of Finance Act 2024 and the government will bring forward regulations to address this issue. These regulations will be subject to the affirmative procedure (meaning it they must be actively approved by Parliament before it becomes law) and if approved would be retrospectively effective from 6 April 2024. 

Protections and enhancement factors — enhancement factors

Question 26 — Do the changes to the calculations for enhancement factors, and their move to Schedule 36 of Finance Act 2004 mean that previous certificates need to be reissued?

No. Regulation 4(24) of the Pensions (Abolition of Lifetime Allowance Charge) Regulations 2024 provides that certificates issued prior to 6 April 2024 will continue to apply.

Enhancement factors do not need to be recalculated and members can continue to rely on their existing certificates.

Question 27 — Where does the legislation provide that applications for enhancement factors will be closed from April 2025?

This is provided for through the changes to the amendments of the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 (SI 2006/131) at paragraph 94 of Finance Bill 2023-24. Paragraphs 94(10)(3), 94(11)(d), 94(12)(e) provide that the closing date for these enhancement factors is the earlier of the relevant date and 5 April 2025.

Question 28 — Will individuals who wish to apply for an enhancement factor in the 2024 to 2025 tax year still need to apply to HMRC using the existing forms?

Yes. Individuals should continue to apply using the:

• APSS201 for an enhancement based on pension credits from previously crystallised rights
• APSS202 for international enhancement factors

Forms will be amended to reference the lump sum and death benefit allowance and not the LTA.

Question 29 — Why are certain individuals with protections or enhancement factors unable to receive an uncrystallised funds pension lump sum (UFPLS)?

New paragraphs 7(8), 12(3H), 18(7), 20A(8), 20B(8) and 20E(9) of schedule 36 to Finance Act 2004 replicate existing provisions under paragraph 4A of schedule 29 to this act. They therefore maintain the circumstances under which certain individuals were not eligible, and will continue not to be eligible, to receive an UFPLS.

Question 30 — Do enhancement factors apply at every RBCE in respect of that member?

No. Under the LTA, most enhancement factors did not increase individuals’ entitlement to a 25% tax-free lump sum. However, as enhancement factors applied at all benefit crystallisation events, they did increase the maximum tax-free element of a serious ill-health lump sum or a lump sum death benefit that an individual could receive.

The changes introduced under Finance Act 2024 to enhancement factors maintain this distinction. Paragraph 67 of schedule 9 introduced new paragraph 6A of schedule 36 to Finance Act 2004. This sets out that enhancements to an individual’s lump sum and death benefit allowance occur at all relevant BCEs except the payment of a pension commencement lump sum or uncrystallised funds pension lump sum.

Protections and enhancement factors — stand-alone lump sums (SALS)

Question 31 — How are SALS tested against the new allowances?

For a SALS paid under either circumstances A (article 25B(2)) or B (article 25B(3)), the individual’s lump sum allowance and lump sum and death benefit allowance will be reduced by the tax-free part of that lump sum. Excess over the permitted maximum can be paid as a SALS but the excess will be taxed as pension income.

For a SALS paid under circumstance C (article 25B(4)), the individual’s lump sum and death benefit allowance will be reduced by the tax-free part of that lump sum. However, the individual’s lump sum allowance will be reduced by 25% of the lump sum. Any excess over the permitted maximum can be paid as a SALS, but the excess will be taxed as pension income.

These provisions are found at paragraph 95(5) of schedule 9 to Finance Act 2024, which amends article 25C of The Amendments of the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (SI 2006/572).

Protections and enhancement factors — individual protection

Question 32 — Why is there no longer a floor of the ‘standard’ allowances for those with Individual Protection 2014 or 2016 whose relevant amount falls below £1,073,100?

This is not an intentional change. We will be bringing forward legislative changes through regulations so that there continues to be a floor. These regulations will be introduced after 6 April 2024, but they will be retrospective to this date.

Protections and enhancement factors — primary and enhanced protection

Question 33 — Will the legislation be amended to ensure that individuals with primary protection or enhanced protection with protected lump sum rights of more than £375,000 can take a PCLS which is not limited by their lump sum allowance?

Yes. For these individuals, the permitted maximum for PCLS does not reference available lump sum allowance. However, we are aware that modifications are also required to paragraph 1(b) of Schedule 29 to Finance Act 2004, to ensure that these protected individuals can receive a PCLS in excess of their permitted maximum. Further changes will be brought forward through regulations. 

Question 34 — If the permitted maximum for each lump sum paid to a member with enhanced protection is on a per arrangement basis in reference to 5 April 2023 or 2024, what happens if the member has transferred to a new provider since that date?

Currently, if an individual transferred to a new provider, then their permitted maximum would be nil. This is because their permitted maximum for each lump sum is tied to the maximum amount that they could have been paid on 5 April 2023 or 5 April 2024. 

However, further changes will be made, through regulations, to provide that members do not lose the benefit of their protection where they transfer to a new provider.

Question 35 — If the permitted maximum for a member with enhanced protection is separately specified for each lump sum death benefit under the arrangement in question, what happens if the type of benefit under the arrangement has changed since 5 April 2024?

These provisions state the member’s permitted maximum amount that they ‘could have been paid’ under that arrangement on 5 April 2024. This does not necessitate that the member has an entitlement to the payment already. For instance, in the case of a flexi-access drawdown lump sum death benefit, the permitted maximum is ‘the maximum amount of a flexi-access drawdown lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement’. This does not necessitate that the funds are actually in flexi-access drawdown on or before 5 April 2024.

Protections and enhancement factors — benefits before NMPA:

Question 36 — For members permitted to take benefits before NMPA, why is their lump sum allowance reduced without accounting for any protections, whereas their reduced lump sum and death benefit allowance does account for protections? 

This is consistent with the treatment under the LTA. Currently, paragraph 23A of schedule 36 to Finance Act 2004 provides that, where certain individuals are permitted to take pension before NMPA, their available portion for a PCLS should be calculated using the current standard LTA. The calculation does not account for any protections.   

By contrast, there is no equivalent provision where a member is taking a serious ill health lump sum or lump sum death benefit. Therefore, any reduction is made to the individual’s LTA, accounting for any valid protections held. These circumstances are replicated for the lump sum allowance and lump sum and death benefits allowance following the abolition of the LTA.

Question 37 — For members permitted to take benefits before NMPA, why does the reduction of 2.5% per full year only apply at the time of crystallisation? 

Under the LTA, where a member with a protected pension age of below 50 took pension benefits before NMPA, their LTA was reduced by a ‘relevant percentage’. This was 2.5% for each complete year falling between the date of their BCE and the date on which they reached NMPA. This was provided for at paragraph 19(4) of Schedule 36 to Finance Act 2004. 

 From 6 April 2024, the ‘relevant percentage’ will remain unchanged. However, consistent with the fact that the new allowances will no longer consider pension benefits already taxed elsewhere, the reduction to a member’s allowances will only occur when the benefits they take before NMPA constitute an RBCE.

Reporting requirements (RTI and Event 24) — Real Time Information (RTI)

Question 38 — Will there be new data items on RTI?

There will be changes to PAYE including new data items for both the PCELS and the stand-alone lump sum.

However, until further notice, you should continue to follow the guidance published as part of the Lifetime allowance guidance newsletter — March 2023. In addition to this guidance, you should report the payment of a PCELS as you would have reported the payment of a lifetime allowance excess lump sum, as set out under the guidance published in March. 

Systems changes are expected to be ready for April 2025 and we will provide further guidance on the PAYE changes and RTI reporting in future newsletters.

Question 39 — Will schemes be required to report lump sum death benefits paid to or in respect of members under age 75 on RTI given they will not be responsible for determining the tax treatment?

Yes. Such payments will need to be reported on RTI as tax-free, unless the payment is of an uncrystallised funds pension lump sum death benefit or defined benefit lump sum death benefit. It will then be the responsibility of the deceased member’s legal personal representative to provide the relevant information to HMRC so that HMRC can raise any marginal rate tax charges on the beneficiaries. The new form for legal personal representatives to provide this information to HMRC will be live from 6 April 2024.

Question 40 — Will a pension commencement lump sum, pension commencement excess lump sum, or small lump sums need to be reported under RTI?

A pension commencement lump sum will not need to be reported under RTI as it is never taxable.

The payment of a PCELS would need to be reported under RTI it is always taxed entirely as pension income.

Small lump sums will continue to need to be reported under RTI, as per current processes.

Question 41 — Where a lump sum death benefit is paid from funds which crystallised before 6 April 2024 and so does not use up an individual’s lump sum and death benefit allowance, should this be reported under RTI?

The point at which funds crystallised do not impact whether the payment of a lump sum death benefit needs to be reported under RTI.

Question 42 — Will an entirely tax-free serious-ill health lump sum need to be reported through RTI?

No. As now, a serious ill-health lump sum where there is no charge to income tax will not need to be reported under RTI.

Question 43 — Will CWG2 guidance be updated given the changes to reporting under RTI?

This will be updated as part of an annual review cycle in readiness for the tax year 2025 to 2026. This is so that the guidance aligns with the system in place.

As previously confirmed, although the legislation to amend PAYE regulations will be introduced during the tax year 2024 to 2025, the new data fields on RTI will not be available until April 2025.

Reporting requirements (RTI and Event 24) — Reportable Event 24

Question 44 — When does Event 24 need to be completed?

Event 24 only applies where either:

• a lump sum (other than a lump sum death benefit) paid exceeds an individual’s available allowances
• a lump sum (other than a lump sum death benefit) paid would have exceeded an individual’s available allowances had the individual not been relying on a protection or enhancement factor
• the aggregate amount of lump sum death benefits paid by a scheme exceed an amount equal to the lump sum and death benefit allowance of £1,073,100 as set out in section 637R — this reporting requirement therefore does not require any assessment of an individual’s available lump sum and death benefit allowance — it will operate similarly to current Event 2

Question 45 — What information will need to be provided under Event 24?

Paragraph 106 of Finance Act 2024, as amended by regulation 9(3) to (4) of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024, provides for the following information to be included in the Event Report under new reportable Event 24:

• the member’s name
• the member’s national insurance number
• the date of the relevant benefit crystallisation event
• the relevant benefit crystallisation event (the nature and amount of the lump sum or lump sum death benefit)
• each protection or enhancement type and the reference number (if applicable)
• the amount of income tax already paid on any excess (if applicable)

These amendments also make clear that where the payment is a lump sum death benefit, the pension scheme administrator does not need to confirm that any tax due has been paid. The tax position will be dealt with by the legal personal representative and HMRC.

Question 46 — Will serious ill-health lump sums and lump sum death benefits paid to or in respect of members aged 75 or over, and which are therefore fully taxable, be reported under Event 24?

A serious-ill health lump sum will need to be reported on Event 24 if it exceeds the individual’s available lump sum and death benefit allowance. This is because a serious-ill health lump sum paid to a member aged 75 or over is still an RBCE.

A lump sum death benefit would need to be reported on Event 24 if the aggregate amounts paid by the scheme exceed £1,073,100. This is because a lump sum death benefit paid in respect of a member who died age 75 or over is still an RBCE.

Question 47 — Will a pension commencement lump sum, pension commencement excess lump sum, or small lump sums need to be reported under Event 24?

A PCLS will only be reportable where the individual is relying on a protection and, had they not had a protection or an enhancement factor, the payment would have exceeded their available allowances.

A PCELS and small lump sums will not be reportable under Event 24 as they are not RBCEs.

Question 48 — Where a lump sum death benefit is paid from funds which crystallised before 6 April 2024 and so does not use up an individual’s lump sum and death benefit allowance, should this be reported under Event 24?

The payment of a lump sum death benefit from funds which crystallised prior to 6 April 2024 are not RBCEs so do not need to be reported on Event 24.

Question 49 — On Event 24, should schemes report when the tax-free element of an UFPLS exceeds the individual’s available lump sum allowance, or when the total value exceeds this amount?

Schemes should report on Event 24 when the full value of an UFPLS exceeds the individual’s available lump sum allowance.

Question 50 — Will schemes need to report members’ reliance on scheme-specific lump sum protection on Event 24? 

Yes. The protections and enhancement factors listed under Event 24 will include scheme-specific lump sum protection. Whilst we understand that this was not previously a requirement when reporting a PCLS, it was a requirement when reporting a standalone lump sum (under reportable Event 8A).

Question 51 — Will schemes need to report members’ reliance on a transitional tax-free amount certificate on Event 24?  

No. There is nothing on Event 24 requiring schemes to report where a member relies on a transitional tax-free amount certificate.

Question 52 — For members with primary protection and protected lump sum rights of more than £375,000, because their PCLS is not limited by their available lump sum allowance, how should schemes report a PCLS on Event 24? 

For these individuals, schemes should report on Event 24 where the PCLS or standalone lump sum paid exceeds the ‘standard’ lump sum allowance of £268,275 or where it exceeds £375,000. This is because the legislation provides that a lump sum is reportable on Event 24 where it would have exceeded an individual’s lump sum allowance had that individual not been relying on a valid protection.

Question 53 — For members with enhanced protection, because schemes will need to determine the tax treatment of lump sums paid by reference to the member’s permitted maximum and not their available allowances, how should schemes report on Event 24? 

For these individuals, schemes should report on Event 24 where the PCLS or standalone lump sum paid exceeds the ‘standard’ lump sum allowance of £268,275 or where it exceeds £375,000. This is because the legislation provides that a lump sum is reportable on Event 24 where it would have exceeded an individual’s lump sum allowance had that individual not been relying on a valid protection.

Schemes should also report on Event 24 where the aggregate of lump sum death benefits paid exceeds £1,073,100. This applies for individuals with enhanced protection as it does for those without protections. 

In the case of individuals with enhanced protection, HMRC is aware that schemes will not be able to report the payment of an UFPLS which or serious ill health lump sum which exceeds the individual’s available allowances. Schemes will only know whether payment exceeds the individual’s permitted maximum under that scheme. The payment should still be reported under RTI.

Transitional arrangements

Question 54 — What is the definition of ‘Lifetime Allowance’ and ‘Benefit Crystallisation Events’ for the purposes of Part 6 of Finance Act 2024 now these have been omitted from Finance Act 2004?

These definitions have been removed from Finance Act 2004, however they retain the same definition as prior to their repeal. As paragraph 129(6) of Finance Act 2024 sets out, ‘a reference in any of paragraphs 125 to 128 or this paragraph to a provision of Finance Act 2004 is to that provision as it had effect immediately before 6 April 2024’.

Transitional arrangements — transitional tax-free amount certificates (TTFAC)

Question 55 — Who should apply for a TTFAC?

The majority of members should not need to apply for a TTFAC. For most, the assumptions built into the standard calculation will accurately reflect the tax-free lump sums they have taken prior to 6 April 2024. We understand there are concerns that a higher volume of members than expected will apply for a TTFAC. HMRC guidance will make clear that the process outlined at paragraph 127 of Finance Bill 2023-24 should only be followed by members who have taken less of their LTA used as tax-free lump sums than under the standard calculation — for instance they did not take their maximum pension commencement lump sum.

Question 56 — If an individual has used 100% of their LTA can they apply for a TTFAC?

Yes. Under the standard transitional arrangements, the member will not have any allowances left. This is because individuals who have used 100% of their LTA before 6 April 2024 cannot have expected to receive any further tax-free benefits, either as pension income or as lump sums. However, they can apply for a TTFAC where they can demonstrate that they used less than 100% of their LTA on tax-free amounts.

Question 57 — Can individuals with pre-commencement pensions apply for a TTFAC?

Individuals whose only ‘pensions in payment’ are pre-commencement pensions and have had no BCEs between 6 April 2006 and 5 April 2024 are not within scope for applying for a TTFAC.

Under the LTA, individuals with a pre-commencement pension in payment have an adjustment to their available LTA. Paragraph 77 of Finance Act 2024 (which amends paragraph 20 of schedule 36 to Finance Act 2004) provides that the existing adjustment, based on the assumption that these individuals have received 25% of their pre-commencement benefits as tax-free amounts, will continue to apply.

Individuals who have a pre-commencement pension in payment, but they have had one or more BCEs between 6 April 2006 and 5 April 2024 will be eligible to apply for a TTFAC. Regulation 4 of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 provides for these members to include evidence of tax-free amounts taken prior to 6 April 2024 in their application for a TTFAC.

Question 58 — Can individuals who have crystallised benefits through a BCE 5, 5A, 5B, or 8 apply for a TTFAC which reflects the fact they have not received any tax-free amounts at these BCEs?

Yes. Individuals who have crystallised benefits at a BCE 5, 5A, 5B, or BCE 8, and who therefore believe that they have taken less than 25% of their LTA used at 6 April 2024 as tax-free amounts, can apply for a TTFAC. Paragraph 129 of Finance Bill 2023-24 sets out that, to apply for a TTFAC, individuals must provide complete evidence of each lump sum or lump sum death benefit (if any) that the individual became entitled to before 6 April 2024. As a result, the legislation does not preclude those who have crystallised benefits and not taken any tax-free amounts from applying.

Question 59 — Can a member choose not to reply on their TTFAC?

No. Members should not apply for a TTFAC where they believe that this might result in lower available allowances than under the standard transitional calculation. This is because the legislation does not allow for members to apply and compare the results under each process. If a TTFAC is issued to a member, there is no opportunity to revert to the standard calculation to determine their available allowances from 6 April 2024. This is because the TTFAC accurately reflects the tax-free amounts from which that member has benefitted and puts them in the correct tax position. No one will be put in a worse tax position by the standard transitional arrangements than they would have been under the lifetime allowance system.

Question 60 — Can a TTFAC be amended?

Certificates should not be amended if they are found to be inaccurate. Paragraph 127(6) of Finance Bill 2023-24 only allows for a certificate to be cancelled. A member or legal personal representative can reapply with accurate evidence should they wish to. This is to ensure that the complete evidence is reviewed each time a certificate is applied for.

Question 61 — What is complete evidence?

The legislation does not prescribe exactly what constitutes complete evidence because this would overly restrict what a scheme can and cannot accept. Complete evidence must always account for the total amount of LTA used in order that schemes can determine what portion of those pension benefits were taken as tax-free lump sums or lump sum death benefits,if any.

Evidence will need to be considered on a case-by-case basis. Complete evidence might include documentation such as:

• financial records
• bank statements
• BCE statements

Question 62 — Will members need to provide evidence of tax-free lump sums taken which were not BCEs and so did not use up any of their LTA?  

No. They would only need to provide evidence in respect of those amounts which used up their LTA or were ‘deemed’ to use up their LTA (for example, tax-free lump sums taken prior to 6 April 2006).

Question 63 — Can members provide further evidence within the 3 month window?

Yes. An application must be accompanied by complete evidence, as set out at paragraph 127(2)(c) of schedule 9 to Finance Act 2024. However, members can provide further evidence within the 3 months.

To confirm, it is not therefore HMRC’s expectation that members can provide evidence piecemeal to the receiving scheme. An application must still be accompanied by complete evidence. However, should the member realise that they have not submitted all their evidence, or should schemes wish to inform members that there is evidence missing, there is nothing in legislation preventing that further information from being provided to the scheme as part of the same application.

There is also no compulsion on schemes to request further evidence from a member where they realise that evidence is missing which the member may hold. 

A response must still be provided within the 3-month window set out at paragraph 3 of schedule 9 to Finance Act 2024. In addition, the 3-month window does not restart each time a member provides additional evidence. The 3 months starts on the date on which the application is received.

Question 64 — Is HMRC considering introducing a requirement for members to provide their LTA percentage used as part of their complete evidence?

Paragraph 129(2) to 129(4) of schedule 9 to Finance Act 2024 define ‘complete evidence’ as evidence of each lump sum and lump sum death benefit (if any) that the individual become entitled to prior to 6 April 2024, insofar as there was no charge to income tax.

It is therefore implicit in legislation that applicants will need to provide evidence of their total LTA percentage used. Without this information it will not be possible for schemes to determine how much of the member’s LTA previously-used amount was taken as tax-free lump sums, and to certify these amounts on the member’s certificate.

Question 65 — If an individual has taken a pension commencement lump sum with scheme-specific lump sum protection prior to 6 April 2024, should the pension scheme adjust downwards the amount taken for the purposes of the transitional arrangements?

No. There will be no requirement for schemes to adjust down the monetary amount of lump sums taken tax-free where the individual holds scheme-specific lump sum protection. Individuals with such protections will automatically have the benefit of their protection reflected in the standard calculation, as this requires that pension schemes deduct only 25% of the individual’s LTA previously-used amount from their lump sum allowance. Likewise, only 25% will be deducted from their lump sum and death benefit allowance unless the individual has received a serious ill-health lump sum. We therefore do not expect that these individuals will need to apply for a TTFAC.

Question 66 — What should a TTFAC contain?

Paragraph 127(5) of Finance act 2024 sets out what information a TTFAC should include. However, the legislation does not prescribe the format a certificate should take in order to give freedom to produce these in ways compatible with your systems and processes.

Question 67 — Who should members apply to for a TTFAC?

Paragraph 127(2) of Finance Act 2024 allows for individuals to apply to any registered pension scheme of which they are a member or, where the application is being made by a legal personal representative, to any registered pension scheme of which the deceased member was a member immediately before their death.

We expect individuals to apply to the scheme from which the payment which constitutes their first RBCE is being made post April 2024. However, we understand that it may be more applicable for some individuals to apply to an alternative scheme — for instance if they have crystallised most of their pension benefits under another scheme, or if they took their ‘less than maximum tax-free lump sums’ from another scheme.

Question 68 — Can members make more than one application to the same scheme?

Nothing in legislation prevents individuals from making more than one application to the same registered pension scheme where an initial application has been refused. However, if no further evidence is provided, schemes may notify the applicant that the application has been refused.

They do not need to reconsider the same evidence or wait 3 months to respond to the member.

Question 69 — Can members apply to a scheme which they are not yet a member of?

No. Paragraph 127(2)(b) of Finance Act 2024 states that an individual may apply ‘to any registered pension scheme of which the individual is a member or, if the individual is deceased, of which the individual was a member immediately before death’. Therefore, the legislation does not allow individuals to apply to registered pension schemes of which they are not yet a member, even if they are about to transfer their pension savings to that scheme.

Question 70 — Can members make an application to an annuity provider?

Currently, paragraph 127(2)(b) Finance Act 2024 requires members or legal personal representatives to make their application to a registered pension scheme. The government will bring forward legislation to provide that applications may be made to an annuity provider.

Question 71 —Why do individuals have to apply before their first RBCE?

Individuals must apply for a TTFAC before their first RBCE because this is the first point at which pension schemes will need to establish an individual’s available allowances and therefore ensure the correct tax treatment of the lump sum or lump sum death benefit being paid. Introducing the option to apply after your first RBCE would introduce additional complexities by potentially requiring the recalculation of tax on lump sum benefits already paid at previous RBCEs.

Question 72 — Does the member or legal personal representative need to apply for the TTFAC before an individual’s first RBCE, or does the certificate also need to have been issued by a scheme?

The certificate must have been issued before the member’s first RBCE. This is clarified in the Pensions Tax Manual: transitional tax-free amount certificates.

Question 73 — Can schemes refuse an application or issue a TTFAC before the end of the 3 month window or must they use the full time to consider an application?

Paragraph 127(4) of schedule 9 to Finance Act 2024 sets out that schemes must issue the applicant with a certificate or notify them that their application has been refused ‘before the end of the period of 3 months’. Therefore, if schemes are satisfied that the evidence is complete, or they have already determined that the evidence is insufficient, they may respond to the applicant in less than 3 months.

Question 74 — What are the penalties for inaccurate certificates issued by a pensions scheme?

Where a certificate is found to inaccurately reflect an individual’s lump sum or lump sum and death benefit transitional tax-free amount, the certificate should be cancelled by the scheme administrator. This is set out at paragraph 127(6) of Finance Act 2024. Members may then be liable for any additional tax due, should their available allowances now be lesser than their certificate stated.

Paragraph 21 of Finance Act 2024 amends the existing penalties at section 264 of Finance Act 2004. This provides for a penalty of £3,000 where:

• an individual fraudulently or negligently makes a false statement
• a pension scheme administrator assists in providing a statement they know to be inaccurate

Where a scheme receives inaccurate information from members, it will therefore not be penalised for the production of an incorrect TTFAC, unless it is found that the scheme has acted fraudulently or negligently.

Question 75 — Will HMRC be introducing a requirement for members to notify every registered pension scheme of which they are a member and have remaining rights that they hold a TTFAC?

Currently, there is no requirement for individuals to provide every pension scheme of which they are a member with a copy of their TTFAC. However, the government will bring forward legislation to require individuals to notify their all their pension schemes (under which they have remaining rights) that they are relying on a TTFAC.

Question 76 — What happens in the event that a transitional tax-free amount certificate is cancelled?

Where a member’s TTFAC is revoked, any past RBCEs will continue to be reduced by the transitional tax-free amounts. This means the actual transitional tax-free amounts. It does not mean the erroneous amounts stated on the individual’s certificate which have been the cause of its cancellation. 

We are considering whether there should be a requirement to notify HMRC where a TTFAC has been revoked so that HMRC can determine where there is further tax due.

Any future RBCEs will be subject to the standard transitional calculation.

Where the revocation of a certificate reveals that the member should have had no lump sum allowance available, it is possible that previous payments were unauthorised. This includes where either:

• there has been a previous RBCE consisting of the payment of a pension commencement lump sum
• a scheme has paid a trivial commutation lump sum or winding up lump sum since 6 April 2024

The government will bring forward legislation to provide that, under such circumstances, these will not be treated as unauthorised payments. They will however be fully taxable at the individual’s marginal rate.

Standard transitional calculation (STC)

Question 77 — Under the standard transitional calculation (STC), what is the correct position where the member received a serious-ill health lump sum whilst under the age of 75 or where the member died under age 75 and their beneficiaries received a lump sum death benefit?

In these circumstances, paragraph 126(4) of Finance Act 2024 provides that 100% of the individual’s LTA previously-used amount should be deducted from their available lump sum and death benefit allowance. It is not the case that only the appropriate percentage of their LTA previously-used amount that was taken as a serious ill-health lump sum or lump sum death benefit should be deducted from their available allowance at the 100% rate. The previously-used amount is not apportioned and the 25% rate does not apply.

Question 78 — How can schemes issue annual statements assuming the STC applies if they are unaware that a member has had a serious-ill health lump sum under another scheme?

Paragraphs 128(3) and 128(5) to (6) of schedule 9 to Finance Act 2024 provide that, for the purposes of issuing statements to members showing their allowances used under that scheme, where members have crystallised benefits prior to 6 April 2024, schemes should assume that 25% of the member’s LTA used has been taken as tax-free lump sums.

However, paragraph 128(6)(a)(i) provides that, for the purposes of the lump sum and death benefit allowance only, where the member became entitled to a serious ill-health lump under age of 75, the scheme under which they became entitled to this benefit should assume that 100% of the member’s LTA used under that scheme was taken as tax-free lump sums. For clarity, no other registered pension scheme of which the individual is a member would be required to reflect this in their annual statements. Read paragraph 128(6)(a)(i).

Should the member then have a relevant BCE under a scheme which did not pay the serious-ill health lump sum, it is at this point that schemes would need to ask if they have received a serious-ill health lump sum under age 75 in order to determine the individual’s available lump sum and death benefit allowance.

Question 79 — Will stand-alone lump sums be included in an individual’s lump sum transitional tax-free amount or lump sum and death benefit transitional tax free amount?

Yes. Regulation 4(15) of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 now provides that paragraph 129(1) of Finance Act 2024 includes any stand-alone lump sums paid before 6 April 2024, as far as that payment was free from income tax, in the lump sum transitional tax-free amount and the lump sum and death benefit transitional tax-free amount.

Question 80 — Should the STC be based on the percentage of standard LTA, or the monetary values of crystallisations revalued?

The standard transitional calculation does not generally require pension scheme administrators to revalue benefits received by members where BCEs occurred prior to the reduction of the standard LTA in 2016. This is because, for administrative ease, HMRC expects that schemes will establish a member’s allowances used by converting the percentage of LTA used as at 5 April 2024 to a monetary figure, before deducting 25% (in most cases) of this amount from the individual’s lump sum allowance and lump sum and death benefit allowances. In most circumstances, the percentage of LTA used on a member’s most recent statement should already have accounted for any revaluations.

Question 81 — Should the STC be based on a member’s protected LTA or the standard LTA?

Where an individual holds a valid protection, the STC should be based on their protected LTA.

Question 82 — Where does the legislation provide that the standard transitional calculation should be based on a member’s protected LTA where they hold a valid protection?

Where the availability of an individual’s lump sum allowance or lump sum and death benefits allowance needs to be determined in accordance with paragraphs 125 and 126 of Finance Act 2024, the reduction to their allowances is based on their LTA previously-used amount. This is defined at paragraph 129(5) as ‘the amount that would have been the previously-used amount for the purposes of section 219 of Finance Act 2004 (availability of individual’s lifetime allowance). An individual’s LTA, as opposed to the standard LTA, accounts for any protections held.

Payment and Entitlement

Question 83 — Where a member’s retirement date is on 6 April 2024 and their paperwork was returned before this date, should any PCLS paid be assessed under the current LTA regime or the new regime?

It should be assessed under the new regime because a member’s entitlement to a PCLS cannot be before 6 April 2024 if that is their retirement date.

Question 84 — Where a member’s retirement date is before 6 April, but the necessary paperwork is received after 6 April, should their benefits be assessed under the current or the new regime? 

This will depend on when the member’s entitlement to benefits is deemed to arise for tax purposes, which will vary depending on the circumstances of the case. For instance, it may be that if a member has a retirement date before 6 April 2024, but their paperwork is not provided in full until on or after 6 April 2024, their benefits will need to be assessed under the new regime.

Question 85 — Where a member’s retirement is after 6 April, but retirement paperwork is received before 6 April, should their benefits be assessed under the current or the new regime? 

Their benefits should be assessed under the new regime because their entitlement to the benefits will not arise until their retirement date, which will be after 6 April 2024.

Member statements

Question 86 — When should annual RBCE statements be produced and should these show LTA percentage used or the monetary amounts of the new allowances used?

As under the LTA, annual statements are required to be issued at least once each tax year.

Pension scheme administrators may continue to use P60s to report allowances used, in which case the annual statement can be issued up to 31 May following the end of the tax year to which it relates.

Where schemes are using P60s relating to the 2023 to 2024 tax year to report allowances used schemes should be reporting the member’s LTA used under the scheme. This is because the LTA remains in force for the 2023 to 2024 tax year. However, should schemes have already updated their systems in readiness for 6 April 2024, they may include the monetary amount of an individual’s lump sum allowance and lump sum and death benefits allowance used on these statements. 

Any other annual statements issued during and following the tax year 2024 to 2025 should notify members of the monetary amounts of their lump sum allowance and lump sum and death benefits allowance used. To determine this, schemes should assume the standard transitional calculation unless they are aware that the member has a transitional tax-free amount certificate in force.

Question 87 — Can schemes continue to use P60s to report allowances used?

Yes. As with the LTA, there is no prescribed format for giving this statement to members, so providers can continue to use the P60 where appropriate.

Question 88 — When providing RBCE statements, should schemes round allowance used or include actual amounts to 2 decimal places?

Schemes may choose whichever is most appropriate for their systems. If your systems allow you to provide members with statements showing the actual amounts of their allowances used (to 2 decimal places and therefore including pence) then you may do so. Where you need to round the figures reported on RBCE statements, you should round down to the nearest pound.

Question 89 — Do pension scheme administrators need to include a separate statement for the lump sum allowance and lump sum and death benefit allowance or, if the numbers are the same, can they just provide one figure?

If the amount of the 2 allowances used is the same, you may report just one figure on the member’s RBCE statement. However, the statement or accompanying communications should make clear that there are 2 allowances, and that the member is receiving one figure because the amount they have used of each allowance is the same.

If the amount of the 2 allowances used are different, you must report both figures on the member’s RBCE statement and set these out separately.

Question 90 — Do statements need to be provided to members where the RBCE is the payment of a fully taxable lump sum and so no allowances have been used?

Yes. The changes introduced by part 5 of schedule 9 to the Finance Act 2024 to regulation 14 of The Registered Pension Schemes (Provision of Information) Regulations 2006 (SI 2006/567) provide that a scheme administrator shall give a statement containing information about the amount of the member’s lump sum allowance, and their lump sum and death benefit allowance used by the RBCE.

There is no provision for a scheme administrator to withhold a statement where the amount of a member’s allowances used is nil.

Question 91 — For individuals who crystallised benefits prior to 6 April 2024, when should schemes issue an annual RBCE statement and when should they issue a one-off statement under paragraph 130 of Finance Act 2024?

An individual should receive an annual statement from their pension scheme if they were receiving an annual statement prior to 6 April 2024, or if they had received an annual statement but these only stopped because the member turned 75.

An individual should receive a one-off statement from their pension scheme if:

• they have had a BCE under that pension scheme prior to 6 April 2024
• they are not in receipt of an annual statement from that scheme
• they have rights remaining within the scheme on 5 April 2024

This requirement would therefore include, for example, but is not limited to individuals:

• who do not have an actual entitlement to be paid a pension, have taken a partial UFPLS and have rights remaining within the scheme
• who have had a test against the LTA (under BCE5/5B) but have not taken any pension benefits
• who do not have an actual entitlement to be paid a pension, have transferred some of their rights over (under BCE8), and have rights remaining within the scheme

Question 92 — Does the one-off reporting exercise required by paragraph 130 of Finance Act 2024 include individuals who are no longer members of the pension scheme?

No. This reporting requirement only applies to individuals who still have rights remaining within the pension scheme. For instance, therefore, it does not include individuals who have taken all their benefits as an UFPLS or who have transferred all their rights under the scheme to a qualifying recognised overseas pension scheme (QROPS).

Question 93 — Will members over 75 need a one-off statement under paragraph 130 of Finance Act 2024, or would they simply fall back into the regular annual reporting? 

If the member has rights remaining in the scheme and are not receiving an annual statement, then they would need to be issued with a one-off statement under paragraph 130. If they are not receiving an annual statement, but they had been in receipt of an annual statement which stopped because they turned age 75, then they would fall back into the regular annual reporting.

Question 94 — Why are annual statements required to show an individual’s lump sum allowance and lump sum and death benefit allowance used, in monetary amounts, whereas paragraph 130 statements need to show their LTA percentage used? 

Annual statements should convert an individual’s LTA percentage used to the monetary amount of their lump sum allowance and lump sum and death benefit allowance used because the LTA is being removed from legislation. Individuals will now need to be notified of their allowances used in order to be able to establish their available lump sum allowance and lump sum and death benefits allowance. 

One-off statements issued under paragraph 130 should show an individual’s LTA percentage used under that scheme as at 5 April 2024. This is to ensure that, where individuals are not receiving annual statements, they have an up-to-date notice of their LTA percentage used for the purposes of the transitional arrangements, including any application for a transitional tax-free amount certificate that they may wish to make.

Question 95 — Will there be a requirement to issue annual relevant benefit crystallisation (RBCE) statements to members over the age of 75?

Yes. Regulations 9(6), 8(b) and 9(b) of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 provide that members over 75 will now need to be issued with annual statements where they have a pension in payment.

This is because unlike under the LTA, there is no test at age 75 against the new allowances. Annual statements will therefore be necessary for determining how much lump sum allowance and lump sum and death benefit allowance has used should they then become entitled to a PCLS or UFPLS after age 75.

Question 96 — How can annuity providers convert LTA percentage used to monetary amounts of lump sum allowance and lump sum and death benefit allowance used if they are unaware whether members hold a valid protection?

Where annuity providers are unaware that members hold a valid protection, they will need to assume that the member’s lump sum allowance is £268,275 and that their lump sum and death benefit allowance is £1,073,100.

Question 97 — What should an annual statement show in respect of benefits crystallised pre-6 April 2024 where a member has a TTFAC?

Currently, the legislation requires that where a member has a TTFAC in force, any annual statements issued thereafter by any scheme of which they are a member no longer assume the STC. Rather, they should include the actual amounts of tax-free lump sums (included in that individual’s lump sum transitional tax-free amount and their lump sum and death benefit transitional tax-free amount) which are attributable to that scheme. However, the government will also bring forward legislation to provide that schemes must only report the actual amounts of LSA and Lump Sum and Death Benefit Allowance (LSDBA) used on such statements at the point at which they become aware that the member is relying on a TTFAC.

Question 98 — Should pension schemes include ‘deemed BCE’ LTA usage in annual RBCE statements where we performed the ‘deemed’ calculation at the members first BCE after 6th April 2006?

There is no requirement to include LTA usage from a ‘deemed BCE’ in the RBCE statement, however schemes may choose to do so. This mirrors the approach under the LTA in respect of annual BCE statements.

Question 99 — Should pension schemes continue to include the percentage of LTA used up in respect of funds subsequently transferred to drawdown in the RBCE statement?

The information which is required to be included in an annual RBCE statement is the amount of member’s lump sum allowance and lump sum and death benefits allowance expended by RBCEs in respect of the scheme where they have not been transferred to another pension scheme. In addition, where the scheme has received a transfer in respect of the member, the amount of lump sum allowance and lump sum and death benefits allowance used on any RBCE in respect of these funds.

Question 100 — At the point of an RBCE, can schemes still establish a member’s available allowances via self-certification or must they request the member’s RBCE statements and any TTFAC? 

As under the LTA, it is a matter for the scheme administrator to decide how to obtain information in order to be able to determine a member’s available allowances, and therefore whether a tax charge arises on the payment of an RBCE. Schemes are expected to retain documentary evidence of any information they have relied on so that, if required, they can show that they have reasonable grounds for believing that a chargeable amount did not arise.

Overseas transfer allowance (OTA)

Question 101 — Will there be new forms for reporting against the overseas transfer charge?

No. Registered pension schemes should continue to use the APSS262 to report the transfer of funds or assets to a QROPS and provide details if the transfer is a taxable overseas transfer. This form will be amended so that schemes are able to report transfers subject to the overseas transfer charge (OTC) under both sections 244AC and 244IA of Finance Act 2004. The form will also require schemes to detail the member’s available OTA on the making of the transfer.

Registered pension schemes should also continue to use the APSS242 to request the repayment of tax deducted on a taxable overseas transfer.

Members of registered pension schemes should continue to use the APSS263 to give their scheme administrator the necessary information to transfer funds or assets to a QROPS.

Question 102 — Is the OTA equal to an individual’s lump sum and death benefit allowance as defined at new section 637R of ITEPA 2003, or their available lump sum and death benefit allowance as provided for at new section 637S of ITEPA 2003?

A member’s initial OTA is an amount equal to their initial lump sum and death benefit allowance as defined at new section 637R of ITEPA 2003. It will therefore be £1,073,100 unless the individual holds a valid protection. The availability of an individual’s lump sum and death benefit allowance will not affect the availability of their OTA.

Question 103 — What statements will schemes need to provide members with information about their overseas transfer allowance used?

Paragraphs 116 to 118 of schedule 9 to Finance Act 2024, which amend regulations 12A and 14ZCA of the amendments of the Registered Pension Schemes (Provision of Information) Regulations 2006, provide that where members transfer pension savings from a registered pension scheme to a QROPS, there will be a requirement on the registered pension scheme to provide the member with a statement including:

• how much of the member’s OTA has been used by that transfer
• if the transfer is taxable, the transferred value of the transfer and whether the overseas transfer charge arises under section 244AC or 244IA
• if there is no overseas transfer charge under 244AC or 244IA, the reason why and where applicable, the section under which it is excluded

HMRC does not prescribe the format of these statements.

Question 104 — Will drawdown funds already tested against the LTA count towards the OTA both under the transitional arrangements and if they are subsequently transferred to a QROPS?

The government will bring forward legislation to provide that funds designated to drawdown before 6 April 2024, and which have therefore been tested against the LTA, are not double counted against the OTA.

Question 105 — Will pre-A day benefits be deducted from a member’s available OTA if no benefit crystallisation event has occurred between 6 April 2006 and 5 April 2024?

 The government will bring forward legislation to provide that the transitional reduction to a member’s OTA includes pre-A day pensions in payment.