So, if a client with no LTA protection and a pre A-day capped drawdown plan with a capped drawdown limit of £15,000 had a BCE on, the pre A-day drawdown would use up:Ĩ0% x 25 x £15,000 = £300,000/£1,000,000 = 30% of their LTA meaning they had £700,000 available for the post A-day BCE. just before the plan converted to flexi-access) Scheme pension = 25 x annual pension amount at the date of the first post A-day BCEĬapped Drawdown (where the first post A-day BCE is between 06/04/06 and 05/04/15) = 25 x Capped Drawdown Limit at date of BCEĬapped Drawdown (where the first post A-day BCE is after 05/04/15) = 80% x 25 x Capped Drawdown Limit at date of BCEįlexi-access Drawdown = 80% x 25 x last available capped drawdown limit (i.e. The value used depends on what type of pension the pre A-day pension is: Pensions that were put into payment prior to 6 April 2006 (also known as pre-commencement pensions) are treated as having crystallised immediately prior to the client’s first post A-day BCE and effectively reduce the amount of LTA available. How are pre A-day pensions in payment tested for LTA purposes?Ī. It's important to remember that the LTA increased by CPI up to the 2020/21 tax year, from the 2021/22 to 2025/26 tax years the chancellor has frozen the increases. For example, someone who has IP16 and a protected LTA of £1,025,000 reverted to the standard LTA when this increased to £1,030,000 from 6 April 2018. No, the increase by CPI from 6 April 2018 onwards only applies to the Standard LTA. Where someone holds these forms of protection, their protected LTA amount will not increase, however, if at any point the Standard LTA increases to an amount that is greater than an individual’s protected amount they will then revert to the higher standard LTA amount.
![flexi 12 freezes flexi 12 freezes](https://i.ytimg.com/vi/ZusDOX-S_TM/maxresdefault.jpg)
![flexi 12 freezes flexi 12 freezes](https://www.trucksnl.com/pictures/ad-6738090-d70601e33ea74edd/earth_drill_diversen_tamrock_maxi_flexi_1994_6738090-3.jpg)
My client has Fixed Protection/Individual Protection, will their protected LTA amount increase by CPI from 2018 onwards?Ī. If your client crystallised £1m of benefits when the Standard LTA was £1m this will have used up 100% of their LTA. Therefore, as they have no LTA remaining they will not benefit from the CPI increase and any further benefits they crystallise will be subject to a LTA excess tax charge. My client crystallised benefits of £1m when the Standard LTA was £1m. Now that the Standard LTA increases by CPI can they crystallise further benefits without incurring a LTA excess?Ī.