A big change for the world of UK pensions. Useful for UK expats ONLY

With the new UK tax year come’s a big change for the world of pensions.

The main change to note is that the Lifetime Allowance is being replaced with three new allowances. These allowances are:

Lump Sum Allowance (LSA) – 268,275 GBP*

Lump Sum and Death Benefit Allowance (LSDBA) – 1,073,100 GBP*

Overseas Transfer Allowance (OTA) – 1,073,100 GBP*

*The allowances may be higher if a client holds lifetime allowance protection.

The LSA and the LSDBA are linked, as the value of the tax-free lump sums are deducted from both allowances.

While Serious Ill-Health lump sums and Relevant Death Benefit lump sums are only deducted from the LSDBA.

As part of these changes, the UK government has changed how the standard crystallisation event interacts with the allowances. Under LTA, the total value of funds crystallised and withdrawn were previously tested against LTA. From the 6 April 2024 only the PCLS or the tax-free portion of an Uncrystallised Funds Pension Lump Sum (UFPLS) are deducted from the lump sum allowances, while the full value of the transfer will be tested against the OTA, on transfer.

These events are known as Relevant Benefit Crystallization Events (RBCEs)

Get in touch if you need help with a UK pension or require a pension through our pensions specialist

lawrence.young@holbornassets.com