{"id":5231,"date":"2024-02-26T14:46:40","date_gmt":"2024-02-26T14:46:40","guid":{"rendered":"https:\/\/www.wealthtime.com\/advisers\/?post_type=blog&#038;p=5231"},"modified":"2024-02-26T15:00:29","modified_gmt":"2024-02-26T15:00:29","slug":"changes-to-the-lifetime-allowance-from-6-april-2024","status":"publish","type":"blog","link":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/","title":{"rendered":"Changes to the lifetime allowance from 6 April 2024"},"content":{"rendered":"\n<p>As the end of the 2023\/24 tax year approaches, it\u2019s important to be aware of some upcoming changes taking place from 6 April 2024. <\/p>\n\n\n\n<p>Here\u2019s a quick heads-up about some of the key changes on the way.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Removal of the lifetime allowance (LTA)<\/strong><\/p>\n\n\n\n<p>As announced in the Spring Budget 2023, the LTA is being removed from 6 April 2024. This will be replaced by three new allowances:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Lump sum allowance \u2013 normally \u00a3268,275* \u2013 broadly, the total amount of tax-free lump sums a client can receive during their lifetime.<\/li>\n\n\n\n<li>Lump sum and death benefit allowance \u2013 normally \u00a31,073,100* \u2013 broadly, the total amount of the tax-free lump sums mentioned above plus any tax-free lump sum death benefit payments.<\/li>\n\n\n\n<li>Overseas transfer allowance \u2013 normally \u00a31,073,100* \u2013 broadly, the amount you can transfer into a qualifying recognised overseas pension scheme (QROPS) without incurring an additional tax charge.<\/li>\n<\/ol>\n\n\n\n<p>* The normal lump sum allowance of \u00a3268,275 is 25% of the current standard LTA of \u00a31,073,100. These amounts will be different if the client has any form of LTA protection and\/or if they crystallised any benefits before 6 April 2024.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Relevant Benefit Crystallisation Events (RBCEs) from 6 April 2024<\/strong><\/p>\n\n\n\n<p>From 6 April 2024, new tests need to be performed at any \u2018relevant benefit crystallisation event\u2019 (RBCE).&nbsp; This occurs when benefits are crystallised and a lump sum is paid to the client during their lifetime, or to another recipient following the client\u2019s death. The lump sum amount crystallised is tested against one, or more, of the client\u2019s remaining available allowances, as set out above.<\/p>\n\n\n\n<p>Rather than using up a percentage of the client\u2019s LTA in relation to all of a client\u2019s crystallised benefits, the new basis will only test lump sum payments against one, or more, of the client\u2019s remaining allowances as a monetary amount.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Transition calculations (for those who started taking pension benefits before 6 April 2024)<\/strong><\/p>\n\n\n\n<p>If a client has crystallised any benefits before 6 April 2024, or they had pensions in payment before 6 April 2006 but they haven\u2019t crystallised any benefits (after 5 April 2006 and before 6 April 2024), their crystallisations and\/or pensions in payment will be taken into account at their first RBCE after 5 April 2024. There are two transitional calculation methods which can be used to do this.<\/p>\n\n\n\n<p>The standard (default) method will apply for most clients, as follows:<\/p>\n\n\n\n<p><strong>Lump sum allowance<\/strong><\/p>\n\n\n\n<p>The client\u2019s (personal) lump sum allowance would be reduced by 25% of the LTA they used before 6 April 2024. &nbsp;For example, if a client without any form of lifetime allowance protection used 60% of their LTA before 6 April 2024, their personal lifetime allowance at their first RBCE after 5 April 2024 would be reduced to reflect that. The reduction would be 25% x (60% x \u00a31,073,100) = \u00a3160,965.50.&nbsp; Therefore, their personal lump sum amount would be \u00a3268,275 minus \u00a3160,965.50 = \u00a3107,310.<\/p>\n\n\n\n<p><strong>Lump sum and death benefit allowance<\/strong><\/p>\n\n\n\n<p>The client\u2019s personal lump sum and death benefit allowance would be reduced to take account of both any lump sum(s) paid to a client during their lifetime and any lump sum death benefits paid following their death.&nbsp; The precise calculation depends on whether the client received any serious ill-health lump sum payment(s),and\/or whether any lump sum death benefit(s) had been paid.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Transitional tax-free amount certificate (TTFAC)<\/strong><\/p>\n\n\n\n<p>The standard (default) method mentioned above makes certain assumptions.&nbsp; For instance, it assumes that everyone who has crystallised any benefits before 6 April 2024 took 25% of those benefits as a tax-free lump sum and it does not take account of any crystallisations (for clients without any form of lifetime allowance protection) that occurred when the standard LTA was less than \u00a31,073,100. &nbsp;<\/p>\n\n\n\n<p>Therefore, as the standard transitional method would not benefit everyone, a client can apply to any of their registered pension schemes for a TTFAC.&nbsp; This will calculate their lump sum allowance and lump sum death benefit allowance using the client\u2019s personal circumstances.<\/p>\n\n\n\n<p>We\u2019ll be providing more details about how your clients can apply for these certificates soon. In the meantime, it\u2019s important to know that:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Clients can only apply for a TTFAC from 6 April 2024<\/li>\n\n\n\n<li>Clients who wish to obtain a TTFAC must do so before their first RBCE after 5 April 2024. For this reason, any clients who &nbsp;currently crystallises each month via drip feed drawdown, or wishes to receive a pension commencement lump sum (PCLS) or uncrystallised funds pension lump sum (UFPLS) early in the 2024\/25 tax year, may need to suspend, or defer, receipt of those lump sum until they have obtained their TTFAC, or forfeit the TTFAC option.<\/li>\n\n\n\n<li>To apply for a TTFAC, a client would need to provide a complete history and evidence of each of their crystallisations before 6 April 2024.<\/li>\n\n\n\n<li>Once a TTFAC has been issued, the figures shown on it must be used to determine a client\u2019s lump sum allowance and lump sum and death benefit allowance (even if they are lower than the figures produced by the standard method).<\/li>\n<\/ol>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Exceeding the allowances<\/strong><\/p>\n\n\n\n<p>The lifetime allowance charge was removed at the start of the 2023\/24 tax year. Therefore, anyone who crystallises above their previous personal LTA limit in the 2023\/24 tax year will not incur a lifetime allowance charge.&nbsp; Any benefit amount which is not tax-free will be taxed at the recipient\u2019s marginal income tax rate(s).<\/p>\n\n\n\n<p>From 6 April 2024, any lump sum(s) taken which exceed(s) one, or more, of the client\u2019s available allowances would also be taxed at the recipient\u2019s marginal income tax rate(s).<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>ISA changes (from 6 April 2024)<\/strong><\/p>\n\n\n\n<p>We\u2019re aware of the upcoming changes to ISAs taking place from 6 April 2024, including multiple subscriptions and partial transfers from current year subscriptions. We\u2019re currently awaiting further guidance from HMRC before we can comment further on the changes.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Tax year end support<\/strong><strong><\/strong><\/p>\n\n\n\n<p>Our tax year end hub has everything you need for a successful tax year end. Get the latest technical insights, join our live webinar to hear from our team, and understand key processes with our wide range of resources.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.wealthtime.com\/advisers\/tax-year-end\/\">Explore the hub<\/a><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p class=\"has-small-font-size\"><strong>Disclaimer:<\/strong><\/p>\n\n\n\n<p class=\"has-small-font-size\">All of the above is presented for general consideration only and no action must be taken or refrained from based on the content of this article alone. Each case depends on its own facts and advice is essential. Accordingly neither Wealthtime nor any of its officers or employees can accept any responsibility for any loss occasioned as a result of any such action or inaction.<\/p>\n","protected":false},"author":5,"featured_media":870,"template":"","class_list":["post-5231","blog","type-blog","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Changes to the lifetime allowance from 6 April 2024 - Advisers<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Changes to the lifetime allowance from 6 April 2024 - Advisers\" \/>\n<meta property=\"og:description\" content=\"As the end of the 2023\/24 tax year approaches, it\u2019s important to be aware of some upcoming changes taking place from 6 April 2024. Here\u2019s a quick heads-up about some of the key changes on the way. Removal of the lifetime allowance (LTA) As announced in the Spring Budget 2023, the LTA is being removed [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/\" \/>\n<meta property=\"og:site_name\" content=\"Advisers\" \/>\n<meta property=\"article:modified_time\" content=\"2024-02-26T15:00:29+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1778\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/\",\"url\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/\",\"name\":\"Changes to the lifetime allowance from 6 April 2024 - Advisers\",\"isPartOf\":{\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg\",\"datePublished\":\"2024-02-26T14:46:40+00:00\",\"dateModified\":\"2024-02-26T15:00:29+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#primaryimage\",\"url\":\"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg\",\"contentUrl\":\"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg\",\"width\":2560,\"height\":1778},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.wealthtime.com\/advisers\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Changes to the lifetime allowance from 6 April 2024\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.wealthtime.com\/advisers\/#website\",\"url\":\"https:\/\/www.wealthtime.com\/advisers\/\",\"name\":\"Advisers\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.wealthtime.com\/advisers\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Changes to the lifetime allowance from 6 April 2024 - Advisers","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/","og_locale":"en_US","og_type":"article","og_title":"Changes to the lifetime allowance from 6 April 2024 - Advisers","og_description":"As the end of the 2023\/24 tax year approaches, it\u2019s important to be aware of some upcoming changes taking place from 6 April 2024. Here\u2019s a quick heads-up about some of the key changes on the way. Removal of the lifetime allowance (LTA) As announced in the Spring Budget 2023, the LTA is being removed [&hellip;]","og_url":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/","og_site_name":"Advisers","article_modified_time":"2024-02-26T15:00:29+00:00","og_image":[{"width":2560,"height":1778,"url":"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/","url":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/","name":"Changes to the lifetime allowance from 6 April 2024 - Advisers","isPartOf":{"@id":"https:\/\/www.wealthtime.com\/advisers\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#primaryimage"},"image":{"@id":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#primaryimage"},"thumbnailUrl":"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg","datePublished":"2024-02-26T14:46:40+00:00","dateModified":"2024-02-26T15:00:29+00:00","breadcrumb":{"@id":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#primaryimage","url":"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg","contentUrl":"https:\/\/www.wealthtime.com\/wp-content\/uploads\/sites\/7\/2022\/08\/wealthtime-hero-scaled.jpg","width":2560,"height":1778},{"@type":"BreadcrumbList","@id":"https:\/\/www.wealthtime.com\/advisers\/blog\/changes-to-the-lifetime-allowance-from-6-april-2024\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.wealthtime.com\/advisers\/"},{"@type":"ListItem","position":2,"name":"Changes to the lifetime allowance from 6 April 2024"}]},{"@type":"WebSite","@id":"https:\/\/www.wealthtime.com\/advisers\/#website","url":"https:\/\/www.wealthtime.com\/advisers\/","name":"Advisers","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.wealthtime.com\/advisers\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/www.wealthtime.com\/advisers\/wp-json\/wp\/v2\/blog\/5231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wealthtime.com\/advisers\/wp-json\/wp\/v2\/blog"}],"about":[{"href":"https:\/\/www.wealthtime.com\/advisers\/wp-json\/wp\/v2\/types\/blog"}],"author":[{"embeddable":true,"href":"https:\/\/www.wealthtime.com\/advisers\/wp-json\/wp\/v2\/users\/5"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.wealthtime.com\/advisers\/wp-json\/wp\/v2\/media\/870"}],"wp:attachment":[{"href":"https:\/\/www.wealthtime.com\/advisers\/wp-json\/wp\/v2\/media?parent=5231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}