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  • FIRST POST
    • LONDONFIRE
    • By LONDONFIRE 10th Sep 17, 9:54 PM
    • 1Posts
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    LONDONFIRE
    LTA excess tax charge on DB pension ?
    • #1
    • 10th Sep 17, 9:54 PM
    LTA excess tax charge on DB pension ? 10th Sep 17 at 9:54 PM
    Hi
    Grateful if anybody could clarify whether I am likely to incur a LTA excess tax charge when start drawing my DB pension scheme as a result of annual RPI increases ?
    Say I have 2016 individual protection of £1.2m and a DB pension of £60,000 pa.
    Therefore no initial LTA excess on commencement, as £60k pa x 20 = £1.2m
    However in year 2 pension will increase by RPI to say £61,800 (+3%), will I incur a 25% LTA excess tax charge on the £1,800 increase ?
    Not sure if pension is measured versus LTA at commencement (BCE) or on an annual basis ?
    Many thanks
Page 1
    • Aegis
    • By Aegis 10th Sep 17, 10:04 PM
    • 4,774 Posts
    • 2,876 Thanks
    Aegis
    • #2
    • 10th Sep 17, 10:04 PM
    • #2
    • 10th Sep 17, 10:04 PM
    Only at commencement for DB schemes.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • BobQ
    • By BobQ 10th Sep 17, 10:28 PM
    • 9,800 Posts
    • 12,746 Thanks
    BobQ
    • #3
    • 10th Sep 17, 10:28 PM
    • #3
    • 10th Sep 17, 10:28 PM
    Hi
    Grateful if anybody could clarify whether I am likely to incur a LTA excess tax charge when start drawing my DB pension scheme as a result of annual RPI increases ?
    Say I have 2016 individual protection of £1.2m and a DB pension of £60,000 pa.
    Therefore no initial LTA excess on commencement, as £60k pa x 20 = £1.2m
    However in year 2 pension will increase by RPI to say £61,800 (+3%), will I incur a 25% LTA excess tax charge on the £1,800 increase ?
    Not sure if pension is measured versus LTA at commencement (BCE) or on an annual basis ?
    Many thanks
    Originally posted by LONDONFIRE
    At commencement. The LTA applies to all occupational pensions so if you have other pensions you may need to include those too.
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
    • zagfles
    • By zagfles 11th Sep 17, 8:16 PM
    • 12,480 Posts
    • 10,470 Thanks
    zagfles
    • #4
    • 11th Sep 17, 8:16 PM
    • #4
    • 11th Sep 17, 8:16 PM
    As above, at commencement. However there is BCE3 which can occur afterwards if the pension is increased by more than a permitted margin, but RPI is fine. See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm088630
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