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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 .

Relevant benefit crystallisation event and enhancement factors
Applying enhancement factors without protections
Applying enhancement factors with protections

If you are looking for information about enhancement factors pre-April 2024 please see .鈥�

The below guidance applies for individuals with an existing enhancement factor or听notified of an entitlement to an enhancement factor between 迟丑别听6 April 2024 to 5 April 2025.听

Drew dies on 23 May 2030, a relevant benefit crystallisation event occurs when a relevant lump sum death benefit of 拢200,000 is paid to his beneficiary on 7 July 2030.听听

顿谤别飞鈥檚 enhanced lump sum and death benefit allowance is calculated. He has no protections.听

拢1,073,100 + (拢1,073,100 x 0.19) = 拢1,276,989听

The relevant lump sum death benefit is then deducted from this figure.听

拢1,276,989 - 拢200,000 = 拢1,076,989听

The beneficiary is not liable for any income tax at their marginal rate as the death benefit has not exceeded the 顿谤别飞鈥檚 enhanced lump sum and death benefit allowance. 顿谤别飞鈥檚 available lump sum and death benefit allowance at 7 July 2030 is 拢1,076,989.

A subsequent relevant benefit crystallisation event occurs on the 20 July 2030 when 拢1,000,000 from another pension scheme is paid to Drew's beneficiary.

His enhanced lump sum and death benefit allowance is 拢1,276,989.

The relevant lump sum death benefit is then deducted from this figure.

拢1,276,989 - 拢1,000,000 = 拢276,989

The lump sum is paid and the previous relevant crystallisation event is then deducted to determine Drew's remaining available lump sum and death benefit allowance.听

拢276,989 - 拢200,000 = 拢76,989

The beneficiary is not liable for any income tax at their marginal rate as the death benefit has not exceeded the lump sum and death benefit allowance of Drew.听

Historic Enhancement Factors听

Individual鈥檚 that gave notification of their intent to rely on enhancement factors prior to 6 April 2024 and have received a certificate confirming their enhancement factor can utilise this for the above calculation.

Example

Shelly notified HMRC of her intention to rely on an enhancement factor and received a non-residence factor of 0.32 on 15 March 2015.

On 25 April 2025, a relevant benefit crystallisation event occurs as a result of Shelly receiving a serious ill-health lump sum of 拢1,500,000.

Shelly鈥檚 enhanced lump sum and death benefit allowance is calculated. She has no protections.

拢1,073,100 + (拢1,073,100 x 0.32) = 拢1,627,020

Her enhanced lump sum and death benefit allowance is 拢1,627,020.

The enhanced lump sum is then deducted from this figure.

拢1,627,020 - 拢1,500,000 = 拢127,020

Shelly is not liable for any income tax at their marginal rate as the relevant lump sum has not exceeded the lump sum and death benefit allowance.

Individual鈥�s with primary protection are entitled to a primary protection factor. Individual鈥�s who have valid primary protection prior to 6 April 2024 will already have their enhancement factor. For individuals who make a valid late application for primary protection on or after 6 April 2024, HMRC听will听calculate the enhancement factor in the following way:听

1. Aggregate the value of the individual鈥檚 relevant uncrystallised pension rights on 5 April 2006 and the value of the individual鈥檚 relevant crystallised pension rights on that date.听听

2. Deduct 拢1,500,000 from听the result of step 1.听听

3. Divide the result of step 2 by 拢1,500,000.听

Example听

Myra makes a valid late application for primary protection on 5 July 2024. Myra鈥檚 primary protection factor needs听to be calculated.听

On 5 April 2006 Myra had uncrystallised pension rights of 拢2,500,000 and 拢100,000 crystallised pension rights.听

拢2,500,000 + 拢100,000 = 拢2,600,000听

拢2,600,000 - 拢1,500,000 = 拢1,100,000听

拢1,100,000 / 拢1,500,000 = 0.73听

Myra has a primary protection enhancement factor of 0.73

Primary Protection

Paragraphs 7 and 20H Schedule 26 Finance Act 2004

For all relevant benefit crystallisation events that occur where the individual has valid primary protection, the individual鈥檚 enhanced lump sum and death benefit allowance is calculated using this formula:

拢1,800,000 + (拢1,800,000 x EF)

EF is the lump sum and death benefit allowance enhancement factor, which is the aggregate of all enhancement factors in relation to the relevant benefit crystallisation event.

Example

Using the example above, Myra has a primary protection enhancement factor of 0.73.

Myra dies on 21 June 2025, a relevant benefit crystallisation event occurs when a relevant lump sum death benefit of 拢1,500,000 is paid to her beneficiary on 7 September 2025.

Myra鈥檚 enhanced lump sum and death benefit allowance is calculated. She has primary protection.

拢1,800,000 + (拢1,800,000 x 0.73) = 拢3,114,000

Her enhanced lump sum and death benefit allowance is 拢3,114,000.

The relevant lump sum death benefit is then deducted from this amount.

拢3,114,000 - 拢1,500,000 = 拢1,614,000

The beneficiary is not liable for any income tax at their marginal rate as Myra鈥檚 enhanced lump sum and death benefit allowance has not been exceeded.

Fixed protection 2012

Paragraph 20H Schedule 36 Finance Act 2004听
Paragraph 14 Schedule 16 Finance Act 2011

For all relevant benefit crystallisation events that occur where the individual has valid FP 2012, the individual鈥檚 lump sum and death benefit allowance is calculated using this formula:

拢1,800,000 + (拢1,800,000 x EF)

EF is the lump sum and death benefit allowance enhancement factor, which is the aggregate of all enhancement factors in relation to the relevant benefit crystallisation event.

Example

Oscar notified HMRC of his entitlement to an overseas scheme transfer enhancement factor on 17 June 2016, his overseas scheme transfer enhancement factor is 0.2.听Oscar notified HMRC of his entitlement to a non-residence factor on 23 July 2024, his non-residence factor was 0.3.

Oscar鈥檚 total lump sum and death benefit allowance enhancement factor is therefore 0.5 (0.3+0.2).

On 25 September 2026 a relevant benefit crystallisation event occurs as a result of Oscar receiving a serious ill-health lump sum of 拢1,500,000.

Oscar鈥檚 enhanced lump sum and death benefit allowance is calculated. He has valid fixed protection 2012.

拢1,800,000 + (拢1,800,000 x 0.5) = 拢2,700,000

His enhanced lump sum and death benefit allowance is 拢2,700,000.

The relevant lump sum is then deducted from this amount.

拢2,700,000 - 拢1,500,000 = 拢1,200,000

Oscar is not liable for any income tax at his marginal rate as he has not exceeded his enhanced lump sum and death benefit allowance.

Fixed protection 2014

Paragraph 20H Schedule 36 Finance Act 2004
Paragraph 1 Schedule 22 Finance Act 2014

For all relevant benefit crystallisation events that occur where the individual has valid FP 2014, the individual鈥檚 enhanced lump sum and death benefit allowance is calculated using this formula:

拢1,500,000 + (拢1,500,000 x EF)

EF is the lump sum and death benefit allowance enhancement factor, which is the aggregate of all enhancement factors in relation to the relevant benefit crystallisation event.

Example

Roger notified HMRC of his entitlement to a pension credit factor on 25 August 2024, his pension credit factor was 0.2.

On 30 September 2029 a relevant benefit crystallisation event occurs as a result of Roger receiving a serious ill-health lump sum of 拢1,000,000.

Rogers鈥檚 enhanced lump sum and death benefit allowance is calculated. He has valid fixed protection 2014.

拢1,500,000 + (拢1,500,000 x 0.2) = 拢1,800,000

His enhanced lump sum and death benefit allowance is 拢1,800,000

The relevant lump sum death benefit is then deducted from this amount.

拢1,800,000 - 拢1,000,000 = 拢800,000

Oscar is not liable for any income tax at his marginal rate as he has not exceeded his enhanced lump sum and death benefit allowance.

Fixed protection 2016

Paragraph 20H Schedule 36 Finance Act 2004
Paragraph 1 Schedule 4 Finance Act 2014

For all relevant benefit crystallisation events that occur where the individual has valid FP 2016, the individual鈥檚 lump sum and death benefit allowance is calculated using this formula:

拢1,250,000 + (拢1,250,000 x EF)

EF is the lump sum and death benefit allowance enhancement factor, which is the aggregate of all enhancement factors in relation to the relevant benefit crystallisation event.

Example

Debora notified HMRC of her entitlement to a pension credit factor on 30 August 2021, her pension credit factor was 0.25.

Debora dies on 28 October 2030, a relevant benefit crystallisation event occurs when a relevant lump sum death benefit of 拢1,000,000 is paid to her beneficiary on 17 November 2030.

Debora鈥檚 enhanced lump sum and death benefit allowance is calculated. She has fixed protection 2016.

拢1,250,000 + (拢1,250,000 x 0.25) = 拢1,562,500

Her enhanced lump sum and death benefit allowance is 拢1,562,500.

The relevant lump sum death benefit is then deducted from this amount.

拢1,562,500 - 拢1,500,000 = 拢62,500

The beneficiary is not liable for any income tax at their marginal rate as Debora's enhanced lump sum and death benefit allowance hasn鈥檛 been exceeded.

Individual protection 2014

Paragraph 20H Schedule 36 Finance Act 2004
Paragraph 1 Schedule 6 Finance Act 2014

For all relevant benefit crystallisation events that occur where the individual has valid IP 2014, the individual鈥檚 lump sum and death benefit allowance is calculated using this formula:

IP 2014 amount + (IP 2014 amount x EF)

Where the individual鈥檚 鈥淚P 2014 amount鈥� is the lower of their relevant amount or 拢1,500,000.

Relevant amount is the total value on 5 April 2024 of the member鈥檚 pension rights in all their relevant arrangements. You can read more about the relevant amount for IP 2014 at PTM176520.

EF is the lump sum and death benefit allowance enhancement factor, which is the aggregate of all enhancement factors in relation to the relevant benefit crystallisation event.

Example

Rose notified HMRC of her entitlement to a pension credit factor on 25 January 2023, her pension credit factor was 0.4.

On 30 September 2029 a relevant benefit crystallisation event occurs as a result of Rose receiving a serious ill-health lump sum of 拢1,250,000.

Rose鈥檚 enhanced lump sum and death benefit allowance is calculated. She has valid individual protection 2014.

The relevant amount is the total value on 5 April 2014 of the member鈥檚 pension rights in all their relevant arrangements, Rose鈥檚 relevant amount is 拢1,600,000, therefore 拢1,500,000 is the lesser amount. 拢1,500,000 is therefore used to calculate Rose鈥檚 enhanced lump sum and death benefit allowance.

拢1,500,000 + (拢1,500,000 x 0.4) = 拢2,100,000

Her enhanced lump sum and death benefit allowance is 拢2,100,000

The relevant lump sum is then deducted from this amount.

拢2,100,000 - 拢1,250,000 = 拢850,000

Rose is not liable for any income tax at her marginal rate as she has not exceeded her enhanced lump sum and death benefit allowance.

Individual Protection 2016

Paragraph 20H Schedule 36 Finance Act 2004
Paragraph 9 Schedule 4 Finance Act 2016听

For all relevant benefit crystallisation events that occur where the individual has valid IP 2016, the individual鈥檚 lump sum and death benefit allowance is calculated using this formula:

IP 2016 amount + (IP 2016 amount x EF)

Where the individual鈥檚 鈥淚P 2016 amount鈥� is the lower of their relevant amount or 拢1,250,000.

Relevant amount is the total value on 5 April 2024 of the member鈥檚 pension rights in all their relevant arrangements. You can read more about the relevant amount for IP 2016 at PTM176530.

EF is the lump sum and death benefit allowance enhancement factor, which is the aggregate of all enhancement factors in relation to the relevant benefit crystallisation event.

Example

Victor notified HMRC of his entitlement to a non-residence factor on 29 December 2024, his non-residence factor was 0.42.

On 15 September 2028 a relevant benefit crystallisation event occurs as a result of Victor receiving a serious ill-health lump sum of 拢1,500,000.

Victor鈥檚 enhanced lump sum and death benefit allowance is calculated. He has valid individual protection 2016.

The relevant amount is the total value on 5 April 2014 of the member鈥檚 pension rights in all their relevant arrangements, Victor鈥檚 relevant amount is 拢1,200,000, therefore 拢1,200,000 is the lesser amount. 拢1,200,000 is therefore used to calculate Victor鈥檚 enhanced lump sum and death benefit allowance.

拢1,200,000 + (拢1,200,000 x 0.42) = 拢1,704,000

His enhanced lump sum and death benefit allowance is 拢1,704,000.

The relevant lump sum is then deducted from this amount.

拢1,704,000 - 拢1,500,000 = 拢204,000

Victor is not liable for any income tax at his marginal rate as he has not exceeded his enhanced lump sum and death benefit allowance.