Richard Turner

Below is cut and pasted a question left on this forum by another user 8 months ago that received no clarifying answer at that time, possibly because the rules had not been decided at that time. With the legislation taking effect on Saturday can the question now be answered? Dear HMRC colleagues, I want to ask a question about the new tax free lump sum rules after the changes in LTA. I have a defined benefit pension of £60k p.a. already crystallised. Multiplying by 20 gives you £1.2m, so I have exceeded the LTA limit. Also, I took 100% of the benefit as pension, and zero amount as tax free lump sum, because I valued the lifetime guarantee. In addition, I have a defined contribution pot of £1m, not yet crystallised. Under the old LTA rules, I would incur a penalty tax of 25% on income drawdown, and would not be able to take any tax free lump sum. After the recent changes, I understand that during tax year 2023/24, the penalty tax rate reduces to 0%, but a tax free lump sum is still not allowed if I have used up the LTA limit. My question is: after the abolition of the LTA regime in tax year 2024/25, will I be able to take 25% of the defined contribution pot as a tax free lump sum, i.e. £250k? - Also, do you know when the details of the new rules will be published, so that my pension provider can read them and implement them? Best regards, Thank you