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Tax free cash limitations & the HMRC Lifetime Allowance / TTFA Certification in 2024/2025

13 March 2024

Although the HMRC Lifetime Allowance (LTA) has been 'abolished' in the new tax year 2024/2025, there are still some significant restrictions that have carried over.

Notably, one of these is the limit on tax free cash that can be paid out, which is restricted to a total of 25% of the old LTA limit of £1,073,100, or if you have a higher protected threshold (with fixed or individual protection), 25% of this amount. For most, this will mean that the limit of tax-free cash from their overall pension benefits/savings will be £268,275.

For those who have never accessed pension benefits before, this should not be a complicated situation and no additional work or calculations will be required. However, for those that have accessed pension benefits in the past, a calculation should be considered. This might be because pension benefits drawn in the past might have been from defined benefit / final salary type plans that did not pay any, or paid limited, tax-free cash at the time.

Transitional tax-free amount certification

Each case will be as individual as the client; however, a calculation should be considered to see how much tax-free cash has been paid in the past and if there is any additional scope to bring the maximum tax-free cash available up to the limit the individual has available (without protection, this would be the £268,275 noted above). If there is a shortfall, it is planned to be possible to apply for a Transitional Tax-Free Amount Certificate. This is planned to detail the monetary amount of tax-free cash paid to an individual before 06 April 2024 from a pension plan or scheme, to allow the current tax-free cash limit to be reached if schemes drawn in the past fell shy of the maximum.

If you have drawn benefits in the past, it is important to reference these to see if you are affected before accessing further tax-free cash. You may want to look at your pension documentation from the past to be ready.

Time to receive certification / decision

Past providers of pension benefits would certify the amount of tax-free cash that an individual drew when benefits were accessed. In order to achieve this, providers will need complete evidence of tax-free lump sums already drawn. Once this has been received to a provider's satisfaction, they will then provide a certificate, which may take them up to three months (the maximum allowable time), or if they will not provide one, they must explain why not within this time period. Therefore, this may create significant delays in accessing tax-free cash.


There are still issues to be clarified and HMRC continues to drip feed guidance on how the new rules, and any certification (to be published) will be applied in practice. We hope to add a link to this certification soon.

With the Budget 2024 now over, all eyes will look towards when a general election will be called and some will factor this into their overall pension planning, particularly if they are affected by the transitional LTA rules. Please do contact the team at Chapters Financial if you are reviewing your pension benefits and the way that these might be accessed.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899

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