DB pension now uses up tax free allowance - even though no tax free cash taken?

dunstonh

I wonder if you can ask them if you can get a TTFC now.  You could say you have only just found out about it - but did the DC scheme ask you lots of questions about the TFLS and LSA when you took it (including whether you had a TTFC)?

It has to be applied for before you take your first BCE after 6th April 2024.   Once you do a BCE after that date, it is too late.  You cannot backdate or retrospectively do it.    

When doing that "first" BCE after 6th April 2024, the declarations the OP agreed would have included a declaration on any transitional reliefs.  The answers form part of the reporting to HMRC.

GC1234567

So basically I'm stuffed.

It's highly unlikely I'll reach the 268k limit, unless the markets go crazy (crazy in an upwards direction that is) but I guess if that's likely to happen I could just withdraw all my tax-free component from my various DC schemes if thay are getting close to the DC limit. 

Notepad_Phil

Excuse me for posting in this existing thread, but I think it makes sense to post as I'm in a similarish position to the OP in that I have a DB pension that started a few years ago from which I took no tax-free lump sum, but as it was in the days of BCE it has taken up some of my LSA. Now I'm aware that unlike the OP that I could get a TTFC should I want one as I have not crystallised anything since April 2024, but I wonder is there any real reason for me to do so?

I only have one DC pension left to crystallise (others were done pre April 2024), and I'm intending to take the 25% out in 2027 when the inheritance rules change. I'll use the cash to fill mine and partner's s&s ISAs with suitable funds.

The DB pension has taken a fair chunk of my LSA, but unless there's a mega increase in stock markets then I will be within the max limits. So is there anything else that I need to consider, or do I just leave as is and just be at say 85% of the max limits when I crystallise instead of 50% if I had the TTFC?

Marcon

Notepad_Phil said:

Excuse me for posting in this existing thread, but I think it makes sense to post as I'm in a similarish position to the OP in that I have a DB pension that started a few years ago from which I took no tax-free lump sum, but as it was in the days of BCE it has taken up some of my LSA. Now I'm aware that unlike the OP that I could get a TTFC should I want one as I have not crystallised anything since April 2024, but I wonder is there any real reason for me to do so?

I only have one DC pension left to crystallise (others were done pre April 2024), and I'm intending to take the 25% out in 2027 when the inheritance rules change. I'll use the cash to fill mine and partner's s&s ISAs with suitable funds.

The DB pension has taken a fair chunk of my LSA, but unless there's a mega increase in stock markets then I will be within the max limits. So is there anything else that I need to consider, or do I just leave as is and just be at say 85% of the max limits when I crystallise instead of 50% if I had the TTFC?

How confident are you that the LSA won't be reduced at the same time...?

Notepad_Phil

Marcon said:

Notepad_Phil said:

Excuse me for posting in this existing thread, but I think it makes sense to post as I'm in a similarish position to the OP in that I have a DB pension that started a few years ago from which I took no tax-free lump sum, but as it was in the days of BCE it has taken up some of my LSA. Now I'm aware that unlike the OP that I could get a TTFC should I want one as I have not crystallised anything since April 2024, but I wonder is there any real reason for me to do so?

I only have one DC pension left to crystallise (others were done pre April 2024), and I'm intending to take the 25% out in 2027 when the inheritance rules change. I'll use the cash to fill mine and partner's s&s ISAs with suitable funds.

The DB pension has taken a fair chunk of my LSA, but unless there's a mega increase in stock markets then I will be within the max limits. So is there anything else that I need to consider, or do I just leave as is and just be at say 85% of the max limits when I crystallise instead of 50% if I had the TTFC?

How confident are you that the LSA won't be reduced at the same time...?

Personally with the inheritance tax changes going on I think the chances of reduction are very low, but if they did reduce the LSA without prior notification then if I was still within the new LSA then all would still be okay, and if I was now outside the LSA then I would expect that they'd put in some protections (as they've done when LTA amounts have previously been reduced) so again I would be okay. If they didn't put in protections then I'd just go through the process of getting the TTFC at that point - and I don't see that they would ever stop TTFC from being generated without giving prior notice.

DRS1

dunstonh said:

I wonder if you can ask them if you can get a TTFC now.  You could say you have only just found out about it - but did the DC scheme ask you lots of questions about the TFLS and LSA when you took it (including whether you had a TTFC)?

It has to be applied for before you take your first BCE after 6th April 2024.   Once you do a BCE after that date, it is too late.  You cannot backdate or retrospectively do it.    

When doing that "first" BCE after 6th April 2024, the declarations the OP agreed would have included a declaration on any transitional reliefs.  The answers form part of the reporting to HMRC.

I had a nasty feeling someone was going to say that.

When I took some TFLSs in 2024 I recall being asked whether I had a transitional tax free certificate but I do not recall anyone asking me if I wanted a transitional tax free certificate.  Now that may have been because I did not take any benefits before April 2024 but I wonder if there is any scope for the OP to say you should have asked me if I wanted one?  Of course we don't know what information they got or gave when taking the DC scheme TFLS last month.

DRS1

GC1234567 said:

So basically I'm stuffed.

It's highly unlikely I'll reach the 268k limit, unless the markets go crazy (crazy in an upwards direction that is) but I guess if that's likely to happen I could just withdraw all my tax-free component from my various DC schemes if thay are getting close to the DC limit. 

Yes but isn't the point that it is no longer 268k for you but a lower amount so you don't have the headroom you may have thought you had.

dunstonh

When I took some TFLSs in 2024 I recall being asked whether I had a transitional tax free certificate but I do not recall anyone asking me if I wanted a transitional tax free certificate.

They wouldn't ask that because it would be an advice question, and they wouldn't want to get into that.

 Now that may have been because I did not take any benefits before April 2024 but I wonder if there is any scope for the OP to say you should have asked me if I wanted one?

Very few pension schemes hold the regulatory permissions to give advice.  They are effectively order takers.

Albermarle

DRS1 said:

dunstonh said:

I wonder if you can ask them if you can get a TTFC now.  You could say you have only just found out about it - but did the DC scheme ask you lots of questions about the TFLS and LSA when you took it (including whether you had a TTFC)?

It has to be applied for before you take your first BCE after 6th April 2024.   Once you do a BCE after that date, it is too late.  You cannot backdate or retrospectively do it.    

When doing that "first" BCE after 6th April 2024, the declarations the OP agreed would have included a declaration on any transitional reliefs.  The answers form part of the reporting to HMRC.

I had a nasty feeling someone was going to say that.

When I took some TFLSs in 2024 I recall being asked whether I had a transitional tax free certificate but I do not recall anyone asking me if I wanted a transitional tax free certificate.  Now that may have been because I did not take any benefits before April 2024 but I wonder if there is any scope for the OP to say you should have asked me if I wanted one?  Of course we don't know what information they got or gave when taking the DC scheme TFLS last month.

From what I remember, it took many months for the new rules to become clear regarding LSA after the LTA was abolished.
When I phoned my SIPP provider about a TTFC ( when it became clear that one might be useful) the first person was pretty confused and advised I ask HMRC . Luckily he put me on hold and asked a colleague who said they were literally that week just putting a process in place and designing a form to fill in, as 'they had quite a few enquiries'
So these seemed to be quite a muddled picture for quite a while. 

GC1234567

DRS1 said:

GC1234567 said:

So basically I'm stuffed.

It's highly unlikely I'll reach the 268k limit, unless the markets go crazy (crazy in an upwards direction that is) but I guess if that's likely to happen I could just withdraw all my tax-free component from my various DC schemes if thay are getting close to the DC limit. 

Yes but isn't the point that it is no longer 268k for you but a lower amount so you don't have the headroom you may have thought you had.

Yes, in this instance, if my DB benefit took up, say 100k of the 268k allowance, then that would leave me, as I understand it, with 168k tax free left. Now, the remaining tax free portion of my SIPPs are a fair way short of that. If, however, by some miracle my SIPPs perform in a stellar fashion over the next few years, and the tax free portion was in danger of breaching that 168k figure, then I guess my best option would be to  immediately take all the tax free component of my schemes so they never reached  that 168k, and leave the rest to grow. 

I just wish I had know about TTFCs a month ago!