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Posted Tue, 13 Feb 2024 09:47:27 GMT by
Hi, Can I check the position with regard to a pre-commencement pension and the new Lump Sum Allowance and the transitional tax-free amount certificate. If having taken benefits before April 2006 but having not had a benefit crystallisation event (BCE) between April 2006 and April 2024. Can you confirm how these benefits are to be treated and also what the impact will be if a BCE is created before April 2024? From reading it would appear the following: 1. No BCE between April 2006 and April 2024 Default position for previously used amount will be £0 as no previous BCE’s occurred/no LTA used Pre-commencements rights tested immediately before the Relevant BCE (RBCE) post April 2024. Calculation to determine the amount used is 25% of the pre-commencement value (25:1) immediately before the RBCE. It would appear the Transitional tax-free amount certificate will not be available given the (default) previously used amount is £0 and the ‘test’ occurs post April 2024? 2. BCE occurred between April 2006 and April 2024 Default position for previously used amount will be 25% of the Lifetime Allowance that has been used from BCE’s (as per other benefits) Transitional Tax-Free Amount Certificate should be available in this instance? The value for the certificate is confirmed to be ‘each pension commencement lump sum’ prior to April 2024. However, benefits taken prior to April 2006 weren't 'Pension Commencement Lump Sums' so does this mean the value for these benefits will be £0 for these pensions? Thanks
Posted Fri, 16 Feb 2024 10:52:01 GMT by HMRC Admin 25
Hi chow123,
Please refer to guidance here:
Taking higher tax-free lump sums with lifetime allowance protection
Thank you. 

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