PCLS in 2023/2024 where LTA exceeds 1,070,000

Albermarle

jamesd said:

The manager was correct.

The usual lifetime allowance calculation rules apply this year even though there is no excess charge. This means that your previous crystallizations where you took no tax free lump sum still count and block you from getting more.

I expect this blocking effect to cease next tax year because you will be below the new Lump Sum Allowance. https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/lifetime-allowance-abolition-from-2024/pension-commencement-lump-sums-pcls but with more detail at https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/lifetime-allowance-abolition-from-2024/the-new-allowances . It appears that only the actual PCLS amounts taken will be deducted from your new Lump Sum Allowance. Note the reference to "or have occurred".

In addition this year the tax free portion of a small pot withdrawal isn't checked against the lifetime allowance or the new Lump Sum Allowance so is available to you this year.

Don't be surprised at confusion, disagreement or me being found to be wrong during the first six months as the laws get passed and understanding of what they mean improves.

Thanks for the link, but it is noticeable that the first line says :

The content of this page is based on our understanding of the draft legislation and other related HMRC announcements as at 18th December 2023.

So as you say nothing seems to have rock solid clarity yet.

I do not want to worry @davec1001 or @FIREDreamer too much, but there seemed to be a point in the semi impenetrable draft legislation, that someone who had already crystallised 100% LTA, would not be able to take part in any of these new arrangements. There is not any logic in that as far as I can see, so may be a quirk that will be ironed out in the final legislation.

RogerPensionGuy

The video below maybe helpful on this thread, I've watched it a few times, sounds like the consultation group had to remind the government it was about to bring out stuff that was just silly wrong and would of caused more quick changes just before or just after the 6th of April2024. 
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These various governments just love playing pension planning football and many people just cannot plan correctly or have too little confidence and leave sensible pension plans and provisions not taken seriously enough.
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https://m.youtube.com/watch?v=yiJGV9cvCeU&t=1446s

jamesd

Yes, it's not rock solid yet.

The tax free lump sum bit that matters most in the current tax year, the small pots rule, is just existing law so that part can be relied on.

shortseller09

jamesd said:

The new rules explicitly exclude the 25% tax free from a small pot from counting towards the Lump Sum Allowance.

Thanks James, but I haven't seen this anywhere, can you provide a link?

FIREDreamer

jamesd said:

Yes, it's not rock solid yet.

The tax free lump sum bit that matters most in the current tax year, the small pots rule, is just existing law so that part can be relied on.

But doesn’t it state you need some lump sum allowance available to take a small pot even tnough the tax free element doesn’t use any of the allowance?

DavidT67

jamesd said:

Yes, it's not rock solid yet.

Relevant Finance Bill is still in committee stage until at least 30th January.  Act of parliment won't be passed until sometime in February at the earliest, subject to whatever else crops up at Westminister.

davec1001

Albermarle said:

I do not want to worry @davec1001 or @FIREDreamer too much, but there seemed to be a point in the semi impenetrable draft legislation, that someone who had already crystallised 100% LTA, would not be able to take part in any of these new arrangements. There is not any logic in that as far as I can see, so may be a quirk that will be ironed out in the final legislation.

I've just 'changed my mind' and rolled back the crystallisation, meaning I have only taken 99% of LTA.

I am crossing my fingers I will be able to access  the LSA when the fog clears.

FIREDreamer

DavidT67 said:

jamesd said:

Yes, it's not rock solid yet.

Relevant Finance Bill is still in committee stage until at least 30th January.  Act of parliment won't be passed until sometime in February at the earliest, subject to whatever else crops up at Westminister.

Is it available to read anywhere?

jamesd

FIREDreamer said:

jamesd said:

Yes, it's not rock solid yet.

The tax free lump sum bit that matters most in the current tax year, the small pots rule, is just existing law so that part can be relied on.

But doesn’t it state you need some lump sum allowance available to take a small pot even tnough the tax free element doesn’t use any of the allowance?

Nope. It's excluded under the law applying for this and prior tax years. If you fancy a search you'll find someone over the LTA using small pots with Hargreaves Lansdown.

jamesd

shortseller09 said:

jamesd said:

The new rules explicitly exclude the 25% tax free from a small pot from counting towards the Lump Sum Allowance.

Thanks James, but I haven't seen this anywhere, can you provide a link?

One of those I posted earlier: 

 https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/lifetime-allowance-abolition-from-2024/the-new-allowances

"Small Pot Payments do not use up the LSA"