Lifetime allowance (LTA) abolition
For up to date news and information on the LTA abolishment and FAQs on how this will affect you and your clients.
New requirement for transitional tax-free amount certificates (TTFAC)
Last updated 19 December 2024
The new lifetime allowance (LTA) regulations issued on 18 November and HMRC’s newsletter issued on 5 December, introduced a new requirement for transitional tax-free amount certificates (TTFAC).
If you have clients who have received a TTFAC, or will apply for one in future, it’s important they’re aware of this new requirement, what they need to do, and the timescales involved.
As part of the abolition of the LTA from 6 April 2024, we need to work out the remaining lump sum allowance for those clients who took benefits before 6 April 2024. TTFACs allow clients to deduct the monetary amounts of tax-free lump sums previously received instead of automatically deducting 25% of the individual’s previously used LTA.
The new requirement is for clients receiving a TTFAC to send a copy of the certificate to all other schemes of which they are a member (see definition below) within 90 days of receiving it. For clients who received a TTFAC before 18 November, the 90-day period runs from 18 November.
It’s important you let your clients know that:
- If they received a TTFAC between 6 April 2024 and 18 November 2024, they have until 16 February 2025 to send a copy to all their other schemes (see definition below).
- If they receive a TTFAC after 18 November 2024, they have 90 days from the date of receipt to send a copy to all their other schemes (see definition below). We’ll include a reminder of this requirement when new TTFACs are issued.
All other schemes in relation to an individual, is defined as:
(a) the scheme administrator of a 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, or
(b) an insurance company to which a registered pension scheme has transferred sums or assets to secure the payment to the individual of a scheme pension or a lifetime annuity.
LTA benefits update
Last updated 18 November 2024
The lifetime allowance was abolished on 6 April 2024. However there were some aspects of the legislation which needed amending. Until that legislation was corrected HMRC suggested clients should delay the payment or transfer of their benefits. That affected a range of clients including those who had scheme specific lump sum protection and those with enhanced or primary protection with lump sum rights in excess of £375,000.
On 18 November 2024 the amending regulations were passed into law. This corrects the legislation and means clients no longer need to consider delaying taking benefits or transferring. If your client would like to take benefits, please process this through the platform or by getting in touch with your usual contact.
