PCLS on a QROPS

I have a QROPS which was funded by UK tax relieved funds (via a transfer from a UK registered scheme in 2016). I am now UK resident. The Relevant Transfer Fund (RTF) was 400k, and it is now worth 600k. Is the maximum PCLS 25% of the RTF or 25% of the current value. So is PLCS 100k or 150k?

Hi

It is based on the current value.

Thank you

Hi, I have a UK tax relieved QROPS which on transfer used 73% of my LTA on transfer in 2013. The fund has grown to circa £2m and I would now like to put the pension into payment as a UK tax resident. Since 2013 I have a UK SIPP in payment that has taken my LTA to 101% of IP2016 £1.25m. My QROPS regulations allow for a maximum tax free PCLS of 30% (circa £600K) but would the maximum tax free PCLS be 25% of the fund as a UK tax resident or would the tax free PCLS be limited to 25% of £1.25m (IP2016)? Thank you.

Hi,

We can only provide general information and guidance in this forum. For an answer to a detailed question of this nature, you would need to contact our Self Assesment team or seek professional advice.

Self Assessment: general enquiries

Thank you.

HI RE HMRC suggestions in pension newsletter 158 - HAve new LTA regulations been signed off or are we waiting post election. If in place, can you link me to them? THAnk you

Hi Steve,
please refer to:-
 Abolition of the Lifetime Allowance (LTA)
and
Find out the rules about Individual Lump Sum Allowances
Thank you.

An individual transfered two UK registered pension schemes to a Malta QROPS in 2020, this would have created two ring-fenced transfer funds. The member is still UK resident, is over age 55 and now wish to take his pension commencement lump sum (PCLS). Is this limited to 25% of the ring-fenced transfer fund subject to the overall lump sum allowance of £268,275 or 25% of the QROPS fund value subject to the overall lump sum allowance of £268,275. The member has no transitional protection and has not previosuly taken any pension benefits.

Hi Matt MacGuire

The applicable amount represents 25% of the capital value of the benefits coming into payment under the relevant arrangements under the scheme generating the lump sum payment,
but ignoring any disqualifying pension credit held. See guidance at PTM063230 - Member benefits: lump sums: Pension commencement lump sum (PCLS): general limits information

Thank you

Steve Sims queried on your community forum a month ago whether the new LTA regulations promised in newsletter 158 had been signed off. One of the matters that these need to address concerns individuals with enhanced protection and protected lumpsum rights of more than £375,000. Your response was a link to an HMRC document dated 22 November 2023 about the abolition of the LTA. This indicated what the policy intent is but did not answer his question. However it may be that you were constrained by being in the middle of a general election campaign. Now that the election is over, can you please indicate when you expect to make the regulations promised by you to enable individuals with enhanced protection and protected lump sum rights to be able to take a PCLS of more than £375,000. Many thanks Ken Dunn

Hi,
Please refer to  the guidance at:
Taking higher tax-free lump sums with protected allowances 
Thankyou.

I have received a response from HMRC Admin 8 to my post of 5 days ago asking when you expect to make the regulations promised by you to enable individuals with enhanced protected lump sum rights to be able to take a PCLS of more than £375,000. Your response referred to the guidance published on 6 April entitled 'taking higher tax-free lump sums with protected allowances'. This confirms the availability of the higher lump sum but does not address when the errors highlighted in newsletter 158 will be addressed. Newsletter 158 recommends delaying the taking of such a lump sum until the amending legislation is effective. This is the question that I asked - when do you plan for the amending legislation to take effect? Are please able to answer this question? Ken Dunn

Hi Ken Dunn,
HMRC cannot advise on when legislation is updated.
Thank you.