Sam Blanning

Hi, Thanks for clarifying that it is 4 years after the end of the tax year, that is really helpful.

Thanks. I was under the impression it was 4 years after the end of the tax year in which the consideration became irrecoverable, per https://www.legislation.gov.uk/ukpga/1970/9/section/43? "Subject to any provision of the Taxes Acts prescribing a longer or shorter period, no claim for relief in respect of income tax or capital gains tax may be made more than 4 years after the end of the year of assessment to which it relates."

An individual sold a business some years ago and was paid partly in cash and partly in loan notes in the sold business. The loan notes paid a fixed rate of annual interest and were repayable in several equal annual tranches. The company initially defaulted on the repayments but continued paying the interest for a while. It paid additional interest on the capital that was overdue for repayment. A few years later, the individual accepted a final settlement (well below what they were owed originally) and the loan notes were extinguished. The rest of the consideration became irrecoverable at this point. This was several years after the tax year in which the business sale took place. Can they reclaim part of the CGT they paid in respect of the loan note consideration originally, under section 48 of Taxation of Chargeable Gains Act 1992?

So if I understand correctly, pension commencement excess lump sums *do* now affect the tapered annual allowance calculation. Unlike in 2023/24 (per HMRC's answer to https://community.hmrc.gov.uk/customerforums/pt/70f72f4f-66eb-ee11-a81c-6045bd0df281), or in previous years when Lifetime Allowance excess lump sums were not subject to income tax.

Thanks for the quick response. I've looked through the guidance and I can't see whether a pension commencement excess lump sum would be included as net income?

Hi, An individual is taking a large defined benefit pension in the current tax year. The pension commencement lump sum will be partly over their remaining lump sum allowance, and therefore taxable as income as a "pension commencement excess lump sum". Does this taxable excess need to be included in their “net income” when calculating their tapered annual allowance for 2024/25? (I have previously asked this question, but at the time it could not be answered as we were not yet in 2024/25.)

Fair enough, thanks for the quick response. May I ask a second question: If they draw the DB pension in this 2023/24 tax year, meaning that under the existing rules they will have a Lifetime Allowance Excess Lump Sum taxable as income, would that LTA Excess Lump Sum be included in their net income when calculating their tapered annual allowance for this tax year?

An individual is taking a large DB pension in 2024/25. The pension commencement lump sum will be partly over their remaining lump sum allowance, and therefore taxable as income as a "pension commencement excess lump sum". Does this taxable excess need to be included in their “net income” when calculating their tapered annual allowance for 2024/25?