Pension Lifetime Allowance Protection – For Expats Only

Pension Lifetime Allowance Protection Tax

Enhanced LTA entitlement for overseas workers with UK pension membership

Have you been an active member of a UK pension scheme while living outside of the UK? If so, you may be entitled to an enhancement to the lifetime allowance.

What is the pension lifetime allowance (LTA)?

The lifetime allowance is the maximum you may save in UK pensions in your lifetime before tax is applied on the excess. The LTA is tested at certain points in time, called Benefit Crystalisation Events (BCEs). It is important you ensure you have planned for the lifetime allowance before you trigger a test – a BCE.

Many don’t realise that the tax on the lifetime allowance is simply due to HMRC putting an effective cap on the total tax relief for pension savings. The lifetime allowance only applies to contributions which have attracted UK tax relief. This means that any contributions made while not claiming UK tax relief (eg. while non-UK resident so not paying UK taxes) may be eligible for enhanced protection.

Pension savers with funds in excess of £800,000 should plan ahead

If you have concerns about the LTA – so expecting that by the point of your retirement you will have a total approaching the LTA limit, you must take advice. Read our FREE guide to the lifetime allowance and the planning options available to avoid taxation for more information.

HMRC lifetime allowance protection is available NOW. Research your options and understand the best HMRC lifetime allowance protection to suit your pension styles, and retirement plans. HMRC protection can be simple to apply. Be wary of HMRC reporting requirements and potential breaches – leading to the loss of HMRC protection.

How do I value my pensions for the lifetime allowance?

UK private pensions are simply tested on the fund value at the point of crystalisation. Defined benefit schemes are tested at 20 x income (plus lump sum if you’re eligible to an automatic one). Add all of your pots up together and see if you need to plan ahead.

The lifetime allowance is only subject to its tax-test at a Benefit Crystalisation Event (BCE). To better understand BCEs and your planning options, read our FREE LTA guide. Our guide includes a history to the LTA, Benefit Crystalisation Events, HMRC’s protection options today, and more.


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