Making light work of the Lifetime Allowance

Session: 9 December 2021

With rising investment values and large defined benefit pension transfers the trend has been on increased interest in the rules around lifetime allowance and attendant planning considerations. 

A key part of that planning is crunching the numbers to identify what, if any, tax charges may be payable. As such we have recently launched an Lifetime Allowance (LTA) modeller to assist planners with these calculations.

During this webinar Les Cameron, Head of Technical took us through the key aspects of the lifetime allowance and some of the planning considerations. Through 3 short case studies he gave a live demonstration of the new modelling tool in action.

After taking part in that session you should now be able to:

  • Describe the operation of the lifetime allowance tax charge
  • Calculate a client's likely LTA charge
  • Evaluate the different ways of dealing with lifetime allowance charges

Presenter – Les Cameron – Head of Technical 

To claim your CPD certificate, test your knowledge with the questions below.

Write down your answers to each of the following questions and check your answers when you click through to claim your CPD certificate on the link below.

Test your knowledge

1. The difference in LTA charge between retaining in pension and taking as a lump sum is

a. 10% 

b. 20%

c. 30%

d. 40%

 

2. LTA charges arising on a members death are paid by 

a. the scheme

b. the beneficiaries

c. the personal representatives

d. any of the above

 

3. Bob moved £500,000 after Pension Commencement Lump Sum (PCLS) into drawdown.  He had a fund value of £600,000 by his 75th birthday and had taken £150,000 of income.

The amount tested against the LTA at age 75 is

a. £100,000 

b. £500,000 

c. £650,000 

d. £750,000

 

4. Sandi was offered a scheme pension of £10,000 per annum.  She commuted some of this for PCLS of £20,000 and a pension of £8,000.

How much LTA did she use

a. £160,000 

b. £200,000

c. £28,000 

d. £180,000

 

To claim your CPD certificate, click here.

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