Confusion Re Post April 2024 Tax Free Cash Documentation Requirements SIPP/DB (LSA)?

JamesP8

Retired several years ago and prior to 2024 had crystallised some of my SIPP, taking the relevant 25% associated tax free cash and utilising a percentage of what was my Lifetime Allowance. 

Having now opted to begin a defined benefit pension and taking a small element of the tax free cash offered, what appeared to be quite straightforward regarding the new LSA appears a little confused.

Whilst I can confirm the LTA percentage already used pre-2024 to the DB administrator, which should enable the pension/tax free cash to proceed, some confusion appears to relate to any future tax free cash request from the remaining and uncrystallised SIPP. 

Had assumed that at the point of DB commencement, the associated tax free cash would be confirmed by the administrator as an additional percentage against the new LSA of £ 268,275 and added to the earlier SIPP crystallisation percentage of the old LTA.

This overall new LSA and LTA combined percentage used could then subsequently just be advised to the SIPP provider verbally, or in writing, when taking additional tax free cash from the remaining uncrystallised SIPP up to the LSA limit and without any formal documentation being required, so no Transitional tax-free amount certificate, or other. 

Grateful for any experience/clarity/views on how this is handled under the new rules please? Thank you.

Albermarle

In theory at least what you say sounds correct. Why are you questioning it ? Has one of the pension providers said something?

There seems to be some issues with some providers interpreting the issue different to others, or just sitting on their hands as long as they can.

zagfles

AIUI the new rules don't use % they use amounts. And unless you apply for a transitional certificate they deduct the % LTA used pre 6/4/2024 from the LSA 
PTM170001 - Lump Sum Allowance and Lump Sum and Death Benefit Allowance: Contents - HMRC internal manual - GOV.UK (www.gov.uk)

JamesP8

Albermarle said:

In theory at least what you say sounds correct. Why are you questioning it ? Has one of the pension providers said something?

There seems to be some issues with some providers interpreting the issue different to others, or just sitting on their hands as long as they can.

Many thanks Albermarle, have now resolved with the administrator, who confirms that no transitional certificate is required going forward (in my case).

JamesP8

zagfles said:

AIUI the new rules don't use % they use amounts. And unless you apply for a transitional certificate they deduct the % LTA used pre 6/4/2024 from the LSA 
PTM170001 - Lump Sum Allowance and Lump Sum and Death Benefit Allowance: Contents - HMRC internal manual - GOV.UK (www.gov.uk)

Many thanks Zagfles, now resolved.