From 6 April 2024, the government removed the Lifetime Allowance (LTA) and replaced it with new lump sum allowances.
If you were paid a tax-free lump sum payment before 6 April 2024 which was less than 25% of the capital value of your benefits paid, and you can provide evidence of this, you can apply for a TTFAC.
The certificate shows your previously used LTA as a percentage of the standard LTA, your lump sum transitional tax-free amount and your lump sum and death benefit transitional tax-free amount.
The certificate can then be used to determine your lump sum allowance (LSA) and lump sum death benefit allowance (LSDBA) when you are paid a relevant lump sum and have a relevant benefit crystallisation event (RBCE).
You can apply for a TTFAC if you have:
- crystalised benefits before 6 April 2024
- taken less than 25% of the capital value as a tax free lump sum
- not had a relevant benefits crystallisation event after 5 April 2024
You may want to apply to the registered pension scheme where you’ve crystallised most of your pension benefits before 6 April 2024 or that you expect to have your first relevant benefit crystallisation event after this date.
Relevant benefit crystallisation event
A relevant benefit crystallisation event takes place when there’s a payment of a relevant lump sum on or after 6 April 2024.
A relevant lump sum for the purpose of the LSA is:
- a pension commencement lump sum
- an uncrystallised funds pension lump sum
- a stand-alone lump sum
A relevant lump sum for the purpose of the LSDBA is:
- a pension commencement lump sum
- a serious-ill health lump sum
- an uncrystallised funds pension lump sum
- a stand-alone lump sum
A relevant lump sum death benefit for the purposes of the LSDBA means any authorised lump sum death benefit other than:
- a charity lump sum death benefit
- a trivial commutation lump sum death benefit
If you’ve already had a relevant benefit crystallisation event on or after 6 April 2024, you cannot apply for a certificate.
Applying for a TTFAC
Check if you can apply for a TTFAC.
To apply, you or a representative, must send an application to any of your pension providers.
The application and certificate must be issued before a relevant benefit crystallisation event.
When applying, you must send evidence to the registered pension scheme of any:
- lump sum paid or confirmation a lump sum has not been paid
- death benefit lump sum paid
If you're applying to NHS Pensions, complete the Application for a transitional tax-free amount certificate and provide complete evidence.
This can be sent by email to pensionsscanningmiddlebrook@nhsbsa.nhs.uk or by post to:
NHS Pensions
PO Box 683
Unit 5
Newcastle Upon Tyne
NE5 9EE
You can email nhsbsa.pensionsmember@nhsbsa.nhs.uk or write to us if you:
- need information to apply for a certificate from another pension provider
- have any further queries
The title of the letter or email header must include 'Information required from the NHS Pension Scheme to apply for a transitional tax-free amount certificate from another pension scheme/provider'.
Once a TTFAC application is received by a scheme, they must accept or reject the application within 3 months.
A TTFAC acceptance must be based on complete evidence and account for all the tax-free lump sums you received and were entitled to before 6 April 2024.
If we see at any point the amount on the certificate does not match your actual lump sum transitional tax-free amount or actual lump sum and death benefit transitional tax-free amount, we must cancel the certificate. You’ll be sent a notice of cancellation.
This well be sent to the personal representatives if the member has died.
The certificate starts when it's issued and ends from the same date if it’s cancelled by the scheme administrator.
If your certificate is cancelled and it changes your tax position, any relevant benefit crystallisation events before the cancellation must be recalculated using the standard transitional calculation based on previous benefit crystallisation events.
You can read information about a TTFAC on GOV.UK.
Public Service Pensions Remedy affected members
If you've not made a choice for the Public Service Pensions Remedy, you may be entitled to a new lump sum amount after making your choice.
If this happens, your TTFAC will be cancelled and could lead to tax owed on lump sums taken using this certificate.
Charges
Lump sum in excess of the LSA
Any lump sum payment that exceeds the LSA is called a pension commencement excess lump sum.
The excess is chargeable at your marginal rate as set by HMRC.
Lump sum in excess of the LSDBA
The legal personal representative must pay any charge to HMRC if the member has exceeded their LSDBA and died.
Lump sum in excess of the OTA
This depends on how the transfer counts against the OTA and if it’s an original or onward transfer.
The charge will be 25% of the excess amount.