LTA: remove charge from April 2023 and abolish from April 2024

Pat38493

jaypers said:

Pat38493 said:

^^ I don't see why not.  Of course you won't get any further tax free cash from the uncrystallised part but this was always the case anyway if you had already used the LTA so no change there.

Obviously you have to do it after 6th April and check with SW.

Not sure the tax free cash part is correct. I’ve already spoken to my advisor as I crystallised when LTA was £1.03m. Although not confirmed, they think that it is entirely feasible that another £10,750 of tax free cash may be available (Difference between original crystallisation event and current maximum). Awaiting finance bill on 23rd to find out! 

Oh - yes - my comment was based on the implication of your original post that you had already used the full LTA.  However, if you used 100% of the LTA at the time, I suspect your adviser might be wrong as my understanding is that it works on percentages.  You might have to wait to see whether they change the way the system works with future legislation - as long as it works the current way you will be considered to have used 100%.

zagfles

For 2023/4 the plan is the LTA remains but there's no LTA charge when going into drawdown. So this means the current PCLS rules remain - 25% of amount crystallised or 25% of remaining LTA whichever is lower.

Because_I_Can

So if I’m reading all the above correctly and assuming the recent LTA announcements proceed as planned, if I currently have a SIPP of £1.38m, I could crystallise the whole pot in 2024/25, take the full tax free element (circa £268k) with the remainder moving into drawdown where I’d only pay the relevant income tax according to the amount I withdraw (I’ll be 57 by then).  

Seems like a no brainer???

I also appreciate a future government could always introduce something else to replace the previous LTA penalty.

ex-pat_scot

Because_I_Can said:

So if I’m reading all the above correctly and assuming the recent LTA announcements proceed as planned, if I currently have a SIPP of £1.38m, I could crystallise the whole pot in 2024/25, take the full tax free element (circa £268k) with the remainder moving into drawdown where I’d only pay the relevant income tax according to the amount I withdraw (I’ll be 57 by then).  

Seems like a no brainer???

I also appreciate a future government could always introduce something else to replace the previous LTA penalty.

That's my understanding, and current plan - albeit i'm not quite yet at LTA 

ukdw

jaypers said:

Pat38493 said:

^^ I don't see why not.  Of course you won't get any further tax free cash from the uncrystallised part but this was always the case anyway if you had already used the LTA so no change there.

Obviously you have to do it after 6th April and check with SW.

Not sure the tax free cash part is correct. I’ve already spoken to my advisor as I crystallised when LTA was £1.03m. Although not confirmed, they think that it is entirely feasible that another £10,750 of tax free cash may be available (Difference between original crystallisation event and current maximum). Awaiting finance bill on 23rd to find out! 

I guess it's possible that the extra £10k PCLS if available might not be available until the year after. So might end up being a good idea to leave £40k uncrystalised. 

Or indeed an interesting question - are annual £3,600/£2,880 pension contributions back on now for people over the LTA - because if so only a few days to get this years in.

gm0

/sarcasm

"An adviser wrong about LTA".   Never heard of such a thing.  It's such a stable and well established regimen with cross party consensus about the importance of stability around a very long terms saving incentive. 

How could that possibly happen.  For shame.

sarcasm/

zagfles

ukdw said:

jaypers said:

Pat38493 said:

^^ I don't see why not.  Of course you won't get any further tax free cash from the uncrystallised part but this was always the case anyway if you had already used the LTA so no change there.

Obviously you have to do it after 6th April and check with SW.

Not sure the tax free cash part is correct. I’ve already spoken to my advisor as I crystallised when LTA was £1.03m. Although not confirmed, they think that it is entirely feasible that another £10,750 of tax free cash may be available (Difference between original crystallisation event and current maximum). Awaiting finance bill on 23rd to find out! 

I guess it's possible that the extra £10k PCLS if available might not be available until the year after. So might end up being a good idea to leave £40k uncrystalised. 

Why? PCLS isn't changing.

Or indeed an interesting question - are annual £3,600/£2,880 pension contributions back on now for people over the LTA - because if so only a few days to get this years in.

Which would only be of any benefit to those who have spare personal allowance.

ukdw

zagfles said:

ukdw said:

jaypers said:

Pat38493 said:

^^ I don't see why not.  Of course you won't get any further tax free cash from the uncrystallised part but this was always the case anyway if you had already used the LTA so no change there.

Obviously you have to do it after 6th April and check with SW.

Not sure the tax free cash part is correct. I’ve already spoken to my advisor as I crystallised when LTA was £1.03m. Although not confirmed, they think that it is entirely feasible that another £10,750 of tax free cash may be available (Difference between original crystallisation event and current maximum). Awaiting finance bill on 23rd to find out! 

I guess it's possible that the extra £10k PCLS if available might not be available until the year after. So might end up being a good idea to leave £40k uncrystalised. 

Why? PCLS isn't changing.

Or indeed an interesting question - are annual £3,600/£2,880 pension contributions back on now for people over the LTA - because if so only a few days to get this years in.

Which would only be of any benefit to those who have spare personal allowance.

If you used all of your LTA for example when it was £1m you would have got £250k - which is £18k less than the new limit quoted. If you crystallise the rest next tax year when they have reduced the rate to zero you might not be able to access the additional £18k - due to the LTA regime still being in place. You might have to wait until the next tax year after that when it is fully gone.

Pat38493

ukdw said:

zagfles said:

ukdw said:

jaypers said:

Pat38493 said:

^^ I don't see why not.  Of course you won't get any further tax free cash from the uncrystallised part but this was always the case anyway if you had already used the LTA so no change there.

Obviously you have to do it after 6th April and check with SW.

Not sure the tax free cash part is correct. I’ve already spoken to my advisor as I crystallised when LTA was £1.03m. Although not confirmed, they think that it is entirely feasible that another £10,750 of tax free cash may be available (Difference between original crystallisation event and current maximum). Awaiting finance bill on 23rd to find out! 

I guess it's possible that the extra £10k PCLS if available might not be available until the year after. So might end up being a good idea to leave £40k uncrystalised. 

Why? PCLS isn't changing.

Or indeed an interesting question - are annual £3,600/£2,880 pension contributions back on now for people over the LTA - because if so only a few days to get this years in.

Which would only be of any benefit to those who have spare personal allowance.

If you used all of your LTA for example when it was £1m you would have got £250k - which is £18k less than the new limit quoted. If you crystallise the rest next tax year when they have reduced the rate to zero you might not be able to access the additional £18k - due to the LTA regime still being in place. You might have to wait until the next tax year after that when it is fully gone.

Yes - but only if they write new legislation in a different way which allows you to incase your tax free allowance when the numbers changed, rather than simply carrying on to use a % like now - if it's the latter, they will still just say that you used 100% of what was available at the time.

zagfles

Pat38493 said:

ukdw said:

zagfles said:

ukdw said:

jaypers said:

Pat38493 said:

^^ I don't see why not.  Of course you won't get any further tax free cash from the uncrystallised part but this was always the case anyway if you had already used the LTA so no change there.

Obviously you have to do it after 6th April and check with SW.

Not sure the tax free cash part is correct. I’ve already spoken to my advisor as I crystallised when LTA was £1.03m. Although not confirmed, they think that it is entirely feasible that another £10,750 of tax free cash may be available (Difference between original crystallisation event and current maximum). Awaiting finance bill on 23rd to find out! 

I guess it's possible that the extra £10k PCLS if available might not be available until the year after. So might end up being a good idea to leave £40k uncrystalised. 

Why? PCLS isn't changing.

Or indeed an interesting question - are annual £3,600/£2,880 pension contributions back on now for people over the LTA - because if so only a few days to get this years in.

Which would only be of any benefit to those who have spare personal allowance.

If you used all of your LTA for example when it was £1m you would have got £250k - which is £18k less than the new limit quoted. If you crystallise the rest next tax year when they have reduced the rate to zero you might not be able to access the additional £18k - due to the LTA regime still being in place. You might have to wait until the next tax year after that when it is fully gone.

Yes - but only if they write new legislation in a different way which allows you to incase your tax free allowance when the numbers changed, rather than simply carrying on to use a % like now - if it's the latter, they will still just say that you used 100% of what was available at the time.

Yes very unlikely that they'd use an amount not a %, after all the small increase in LTA since it was at £1M has only been inflation increases.