The government has published new regulations to address errors and omissions around the removal of the lifetime allowance (LTA) in the Finance Act 2024, although industry experts have warned that it is not yet "job done".

The Finance Act 2024 delivers an amended pensions tax regime, effective from 6 April 2024, in which the LTA on most pension and lump sum benefits is replaced by two new allowances on most lump sum benefits.

However, industry experts warned at the time that this was a "rushed job with errors and omissions coming to light, resulting in HMRC having to now engage in a patch and mend job through regulations that are promised".

In line with this, the latest regulations make consequential, transitional and saving provision in connection with the abolition of the lifetime allowance charge and as to the operation of the pension commencement excess lump sum.

The regulations also contain amendments to both the primary and secondary legislation.

This includes legislation that provides that, where a lump sum to which a member became entitled before 6 April 2024 is paid after this date, the amendments made by the Finance Act 2024 should be disregarded for the purposes of determining whether that lump sum is payable, as well as for determining the tax treatment of that lump sum.

It also includes legislative changes to ensure that the valuation of rights, assessed against the £30,000 threshold for payment of a trivial commutation lump sums (TCLS), does not double count pre-A Day pensions in payment.

However, LCP head of pensions research, David Everett, warned that this is “unlikely to be ‘job done’ for HMRC when it comes to legislating for this modified pension tax regime”.

He stated: “These important, but highly technical, regulations have been necessary as errors and omissions have been discovered in the recently enacted Finance Act 2024.

“The regulations seem to address nearly all of the promised changes highlighted in various HMRC newsletters since December 2023 and as such are very welcome.

“Scheme administrators, in particular, will need to take note of some of the changes made by these regulations. These include which lump sums and lump sum death benefits will need to be newly reported to HMRC, and how the new lump sum allowances are established for those who have started to take benefits before 6 April 2024.

“Unfortunately, this is unlikely to be ‘job done’ for HMRC when it comes to legislating for this modified pension tax regime.

"We are aware of other changes that will need to be made to the new law, and trust that HMRC will tackle them in a timely manner. “

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