Individual Protection 2016 Lifetime Allowance Deadline April 20

Published / Last Updated on 02/04/2020

Individual Protection 2016 Lifetime Allowance Deadline 05/04/2020:

2016 Fixed and Individual Protection

April 2016 – the Lifetime Allowance (LTA) was  reduced from £1.25m to £1m.

You could apply for Fixed Protection 2016 – if you were not going to accrue any further pension rights after April 2016 to keep a LTA of £1.25m.  If you accrued further pension rights after this time, you lose your fixed protection.

If you were going to continue to accrue pensions rights after April 2016 but were already above £1m in accrued pension rights, e.g. £1.1m, you would be penalised as you would already be over the £1m limit.

Individual Protection 2016 (IP 2016)

If you still accrued pension rights after April 2016 and were already over £1m in accrued rights in April 2016, you are allowed (and still allowed) to apply for IP 2016.

E.g. If £1.1m accrued rights at April 2016, your IP LTA is set at £1.1m (this will be increased in line with general lifetime allowance increases and you can still accrue more pension rights without losing your IP 2016 unlike Fixed Protection 2016).

Lifetime Allowance under Individual Protection Since 2016:

  • £1m LTA has been indexed (7.3%) since 2016 to £1.073m as at 06/04/2020.
  • This means that if you had IP 2016 at £1.1m (indexed at 7.3%) = £1,180,000 IP Lifetime Allowance for 2020/21.

BUT – you have to prove to HMRC that your accrued pension funds were valued at over £1m on 05/04/2016.  Otherwise you are stuck with the normal lifetime allowance.

DEADLINE – SCHEMES ARE ONLY REQUIRED to offer these figure at April 2016 for 4 years.  After 5/4/2020 – they no longer obliged.

They may continue to do so, they may not, they may even charge you.

If this may apply to you either a) Check your records to make sure you have pension values as at 5th April 2016 or b) contact pension schemes as soon as possible to get values or contact us for help.

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