Lifetime allowance (LTA) meaning

In this issue: Companies and corporation tax Stamp taxes VAT Individuals and income tax Taxes management and litigation Employment taxes Budget and Finance Bills Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal decides interest on intra-group loans not restricted under transfer pricing rules but debits disallowed under unallowable purpose rule (BlackRock Holdco 5, LLC v HMRC) BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 considers whether, for UK tax purposes, interest on intra‑group borrowing put in place to help fund a commercial acquisition is deductible. Two principal points were before the Court of Appeal: the transfer pricing analysis and the loan relationships unallowable purpose question. On the transfer pricing limb, the Court of Appeal allowed the taxpayer’s appeal. As a result, deductions for interest on the intra‑group loans were not curtailed by the transfer...

Original news Mr R (CAS-54306-K6B1) – 26 October 2024. Summary The Pensions Ombudsman dismissed a complaint concerning a scheme’s delay in crystallising pension benefits during a transfer, which the member argued caused higher-rate tax on future withdrawals and used more of his lifetime allowance than would otherwise have been necessary. Although the delay was held to be maladministration, responsibility for tax liabilities arising from subsequent crystallisation events did not fall on either the transferring or the receiving scheme. In addition, any loss he said he suffered was offset by growth in his fund over the period, which produced a larger tax-free lump sum and, in total, a lower tax bill. This decision is a reminder that a professional will not be accountable for every loss flowing from a breach of duty... What were the facts? ...

In this issue: Spring Budget 2024 The Pensions Regulator Pensions taxation The Pension Protection Fund Investment Scheme governance Daily and weekly news alerts Dates for your diary Trackers Spring Budget 2024 Key pensions announcements and views from the market In the Spring Budget 2024, delivered on 6 March 2024, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, outlined the government’s central objective: to stimulate growth by funnelling more capital into UK equity markets, improving the UK’s standing as a listing venue, and building on the Mansion House reforms announced in the Autumn Statement 2023. Key pensions measures include: expanding the regulatory remit of the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) to enable the closure or winding-up of poorly performing defined contribution (DC) schemes, aligned with the reformed Value for Money (VFM) framework requiring DC funds to publish, by 2027, a public breakdown of...

THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES By means of Schedule 4 to the Finance Act 2016 (FA 2016), the government brought in an allowance protection regime designed to sit alongside the cut in the lifetime allowance from £1.25m to £1m on 6 April 2016. Termed fixed protection 2016 (FP 2016), it mirrors earlier fixed protection regimes respectively launched on 6 April 2012 (fixed protection 2012, or simply ‘fixed protection’) and 6 April 2014 (fixed protection 2014). This Practice Note focuses on FP 2016, which is the subject of this Practice Note. The original purpose of FP 2016 was to give transitional protection to people who, before 6 April 2014, had already accumulated pension savings above £1m, or who expected to do so on the basis that the lifetime allowance would be maintained at no less than £1.25m. Although the lifetime allowance was removed with effect from 6 April 2024, FP 2016 still delivers limited transitional safeguards regarding an individual’s rights to (i) the lump sum allowance, (ii)...

A-day 'A-day' is the widely used term for the broad pension tax 'simplification' reforms that began on 6 April 2006. The changes covered: how much pension contribution was allowed, the kinds of schemes an individual could invest in, the sums that could be taken (and when), and the choices available for any remaining fund. A-day also introduced the annual allowance and the (now abolished) lifetime allowance. See: Annual allowance and Lifetime allowance. AFPS AFPS: Armed forces pension scheme; see Practice Note: Public sector pensions and family proceedings. Accrual rate The speed at which pension benefits build as pensionable service is completed in a final salary scheme, eg 1/60 for each year of pensionable service. Accrued benefits The benefits earned in respect of service up to a specified date. Added years Extra pension provided by adding further years of pensionable service in a salary-related scheme. Such additional years are secured via transfer payments or through additional voluntary contributions/augmentation...

This Practice Note summarises the characteristics of the different forms of allowance protections. Allowance protections exist in several variants. Their initial role was to curb or eliminate exposure to the lifetime allowance (LTA) charge. With the LTA charge removed on 6 April 2023, and the entire LTA regime abolished from 6 April 2024, the emphasis of protections has shifted to: the higher lump sum allowance, and the higher lump sum and death benefit allowance, that they can confer—for further information, see What does the protection do?, below the prospect of a higher tax-free lump sum—for further details, see Lump sum protections, below HMRC provides a protection look-up facility giving registered pension scheme administrators and practitioners the means to verify whether the allowance protection (or enhancement) a member relies upon is valid for a higher lump sum allowance and/or lump sum and death benefit allowance. Since early 2026, this service—called ‘Check a pension scheme member’s protections and enhancements’—has been available through the Managing...