Lifetime Allowance Protection

 Lifetime allowance - download graphicLifetime Allowance Protection

Lifetime allowance protection

The government understands that it would not be fair to backdate the new LTA to savers who already have pension values in excess of the new proposed limit and therefore will offer savers two types of protection that will be available to people when the new LTA comes into force. For a more detailed look at lifetime allowances download our complimentary guide by following this link ‘Lifetime allowance guide’

Individual

This type of protection will allow you to protect the value of your pension before the lifetime allowance is reduced and is designed so that people with pension funds that exceed the new LTA are not automatically taxed in accordance with the new limit. For example, someone with pension savings worth £1.1m on 5 April 2016 can lock-in a personal LTA of £1.1m as this is still inside the current limit. However, someone with savings worth £1.4m would only secure a £1.25m allowance or the value up to the current LTA. It is important to note that you cannot protect funds in excess of the current or in some cases previous LTA. The protection will be available until April 2019.

Fixed

This type of protection will allow you to lock in the current LTA for your pension, however, no further contributions can be made and any growth in the value of the fund will, therefore, be from investment growth alone. For example, someone who has pension savings of £1.1m and is happy to make no further contributions until they retire can apply fixed protection to the pension and this will allow the investment growth of the pension to grow to the previous limit of £1.25m even after the LTA has been lowered below this limit. The protection will allow you to protect the previous LTA of £1.25 million and can be applied retrospectively from 2016. Protecting your lifetime allowance is essential and can result in saving of hundreds of thousands of pounds in some cases.

For a more detailed look at lifetime allowances download our complimentary guide by following this link ‘lifetime allowance’

Capital Wealth Partners we operate an open information policy. This means that we are happy to talk through the various options with you without charge and on a no-obligation basis either over the phone or face to face. So get in touch and see if we can help.

Call or email our team now on:

0844 338 6622 or email us at info@cwpwealth.co.uk

 

Capital Wealth Partners Limited is a company registered in England and Wales and are authorised and regulated by the Financial Conduct Authority.