PTM174600 - Lump sum allowance and lump sum and death benefit allowance: Transitional rules for the tax year 2024-25: Individual protection
As of 6 April 2024 there is no longer lifetime allowance. If you are looking for information about protections, enhancement factors and the lifetime allowance charge please see these pages on .
If you are looking for information about the principles of lifetime allowance and benefit crystallisation events please see these pages of .
Individual protection 2014 (IP14)
Individual protection 2016 (IP16)
Individual protection 2014 (IP14)
Paragraph 1 Schedule 6 Finance Act 2014
Individuals who had pension savings in excess of 拢1,250,000 could apply to HMRC for IP14 protection from the lifetime allowance charge when those rights come in payment after 5 April 2014.
As of 6 April 2024, the lifetime allowance charge has been abolished, but an individual is entitled to have their lump sum allowance (see PTM171000) and lump sum death benefit allowance (see PTM172000) protected.鈥€�
Individuals with IP14 that have had benefit crystallisation events (BCEs) prior to 6 April 2024 will need to consider the below information to calculate their lump sum and lump sum death benefit allowance availability prior to their first relevant benefit crystallisation event.鈥€�
These transitional rules apply from the 2024-25 tax year.
Lump sum and death benefit allowance availability
Paragraph 126 Schedule 9 Finance Act 2024
For an individual with IP14, the聽lump sum and death benefit allowance (LSDBA) will be the lesser of 拢1,500,000 or 25% of the individual鈥檚 relevant amount (see PTM176520), and they will be subject to the transitional lump sum and death benefit allowance calculations (see PTM174200).
If an individual has taken less of their benefits before 6 April 2024 as tax-free lump sums than assumed under the standard transitional calculation, and the individual has complete evidence of this, they can request a transitional tax-free amount certificate from their certification administrator, see PTM1743000.
Example
Hamish dies, aged 68, on 11 March 2026. A relevant benefit crystallisation event occurs on 7 May 2026 as a Hamish鈥檚 nominee is paid 拢200,000 as an uncrystallised funds pension lump sum death benefit. To work out his available lump sum and death benefit allowance he must first deduct a percentage of the value of any benefit crystallisation events (BCEs) that occurred prior to 6 April 2024.
Hamish held valid IP14 protection.
Hamish does not have a transitional tax-free amount certificate.
Hamish鈥檚 lifetime allowance previously-used amount isf 拢400,000.聽
25% of this figure (拢100,000) is deducted from his lump sum and death benefit allowance.
As Hamish has valid FP14, his lump sum and death benefit allowance is the lesser of 拢1,500,000 or his relevant amount. The relevant amount is the total value on 5 April 2014 of the member鈥檚 pension rights in all their relevant arrangements. Hamish鈥檚 relevant amount is 拢1,200,000, which is less than 拢1,500,000.
拢1,200,000 - 拢100,000 = 拢1,100,000
Therefore, Hamish鈥檚 available lump sum and death benefit allowance at 6 April 2024 is 拢1,100,000.
The amount of the relevant benefit crystallisation event occurring on 7 May 2026 needs to be deducted from this figure:
拢1,100,000 鈥� 拢200,000 = 拢900,000
As of 7 May 2026, Hamish鈥檚 has 拢900,000 lump sum and death benefit allowance remaining.
Lump sum allowance availability
Paragraph 125 Schedule 9 Finance Act 2024
For an individual with IP14, their lump sum allowance will be the lesser amount of either 拢375,5000 or 25% of the individual鈥檚 relevant amount, and they will be subject to the transitional lump sum聽allowance calculations (PTM174100).
If an individual has taken less of their benefits before 6 April 2024 as tax-free lump sums than assumed under the standard transitional calculation, and the individual has complete evidence of this, they can request a transitional tax-free amount certificate from their certification administrator, see PTM1743000.
Example
Kate has a relevant crystallisation event on 12 September 2026. She receives a pension commencement lump sum (PCLS) of 拢80,000. To work out her available lump sum allowance she must first deduct a percentage of the value of any BCEs that occurred prior to 6 April 2024.
Kate has valid IP14 protection.
Kate does not have a transitional tax-free amount certificate.
Kate鈥檚 lifetime allowance previously-used amount is 拢420,000.聽
25% of this figure (拢105,000) is deducted from her lump sum allowance.
As Kate has IP14 her lump sum allowance is the lesser of 拢375,000 or 25% of her relevant amount. The relevant amount is the total value on 5 April 2014 of the member鈥檚 pension rights in all their relevant arrangements. Kate鈥檚 relevant amount is 拢1,640,000, of which 25% is 拢410,000, so 拢375,000 is the lesser amount.
拢375,000 - 拢105,000 = 拢270,000
Kate鈥檚 available lump sum allowance at 6 April 2024 is 拢270,0500. Therefore, Kate鈥檚 lump sum allowance is sufficient for her to receive the tax-free PCLS of 拢80,000.
The amount of the relevant benefit crystallisation event occurring on 12 September 2026 then needs to be deducted from this figure.
拢270,000 鈥� 拢80,000 = 拢190,000
Kate鈥檚 lump sum allowance as of 12 September 2028 is 拢190,000
Individual protection 2016 (IP16)
Paragraph 9 Schedule 4 Finance Act 2016
Individuals who had pension savings in excess of 拢1,000,000 could apply to HMRC for IP16 protection from the lifetime allowance charge when those rights came into payment after 5 April 2016.
As of 6 April 2024, the lifetime allowance charge has been abolished, but an individual is entitled to have their lump sum allowance and lump sum and death benefit allowance protected.鈥€�
Individuals with IP16 that have had benefit crystallisation events prior to 6 April 2024 will need to consider the below information to calculate their lump sum and lump sum death benefit allowance availability prior to their first relevant benefit crystallisation event.鈥€�
Lump sum and death benefit allowance availability聽
Paragraph 126 Schedule 9 Finance Act 2024
For an individual with IP16, the聽lump sum and death benefit allowance will be the lesser of 拢1,250,000 or the individual鈥檚 relevant amount (see PTM176430), and they will be subject to the transitional lump sum and death benefit allowance calculations (see PTM174200).
If an individual has taken less of their benefits before 6 April 2024 as tax-free lump sums than assumed under the standard transitional calculation, and the individual has complete evidence of this, they can request a transitional tax-free amount certificate from their certification administrator, see PTM1743000.
贰虫补尘辫濒别听
Phillipa has a relevant benefit crystallisation event on 29 March 2028. She receives a PCLS of 拢100,000. To work out her available lump sum and death benefit allowance she must first deduct a percentage of the value of any BCEs that occurred prior to 6 April 2024.
Phillipa does not have a transitional tax-free amount certificate.
Phillipa鈥檚 lifetime allowance previously-used amount is 拢500,000.
25% of this figure (拢125,000) is deducted from her individual lump sum and death benefit allowance.
As Phillipa has valid IP16, her lump sum and death benefit allowance is the lesser of 拢1,250,000 or her relevant amount. The relevant amount is the total value on 5 April 2016 of the member鈥檚 pension rights in all their relevant arrangements. Philippa鈥檚 relevant amount is 拢1,400,000, so 拢1,250,000 is her lump sum and death benefit allowance as it is the lesser amount.
拢1,250,000 - 拢125,000 = 拢1,125,000
Phillipa鈥檚 available lump sum and death benefit allowance at 6 April 2024 is 拢1,125,000. Therefore, Philippa鈥檚 lump sum and death benefit allowance is sufficient for her to receive the tax-free PCLS of 拢100,000.
The amount of the relevant benefit crystallisation event occurring on 29 March 2028 then needs to be deducted from this figure.
拢1,125,000 鈥� 拢100,000 = 拢1,025,000
Phillipa鈥檚 lump sum death benefit allowance at 29 March 2028 is 拢1,025,000.
Lump sum allowance availability聽
Paragraph 125 Schedule 9 Finance Act 2024
For an individual with IP16, the lump sum allowance will be the lesser of 拢312,500 or 25% of the individual鈥檚 relevant amount, and they will be subject to the transitional lump sum allowance calculations (PTM174100).
If an individual has taken less of their benefits before 6 April 2024 as tax-free lump sums than assumed under the standard transitional calculation, and the individual has complete evidence of this, they can request a transitional tax-free amount certificate from their certification administrator, see PTM174300.
Example
Continuing with the example of Phillipa above.
Philippa receives a PCLS of 拢100,000 on 29 March 2028. She has IP16 and her lifetime allowance previously-used amount is 拢500,000.
25% of this figure (拢125,000) is deducted from her lump sum allowance.
As Phillipa has IP16, her lump sum allowance is the lesser of 拢312,500 or 25% of her relevant amount. Philippa鈥檚 relevant amount is 拢1,400,000, of which 25% is 拢350,000, so 拢312,500 is the lesser amount.
拢312,500 - 拢125,000 = 拢187,500
Phillipa鈥檚 available lump sum allowance at 6 April 2024 is 拢187,500. Therefore, Philippa鈥檚 lump sum allowance is sufficient for her to receive the tax-free PCLS of 拢100,000.
The amount of the relevant benefit crystallisation event occurring on 29 March 2028 then needs to be deducted from this figure.
拢187,500 - 拢100,000 = 拢87,500
Phillipa鈥檚 lump sum allowance as of 29 March 2028 is 拢87,500.