HMRC has shared further clarifications about regulations around the abolition of the lifetime allowance (LTA) after receiving “several queries” since the publication of the amending legislation.

The regulations were published in October 2024 after the Finance Bill received Royal Asset in February 2024, and further regulations were enacted in March 2024 to address concerns around the act.

On transitional rules for those who already have a transition tax-free amount certificate (TTFAC), HMRC provided some clarity for circumstances in which a TTFAC was issued or cancelled.

HMRC stated that the earliest date from which members must send a copy of the certificate to other schemes of which they are a member was the day on which the regulations came into force (18 November 2024).

They must do this within 90 days of it being issued or cancelled, from 18 November at the earliest, or before any relevant benefit crystallisation event (BCE).

It noted that while the regulations came into effect from the start of the current tax year, the obligations imposed by them only apply once they have come into force.

Meanwhile, HMRC added that individuals whose only pensions in payment are pre-commencement pensions and who have had no BCE between 6 April 2006 and 6 April 2024 are not eligible to apply for a TTFAC.

However, those who have pre-commencement pensions in payment, but who have had one or more benefit crystallisation event between 6 April 2006 and 6 April 2024, are eligible to apply.

These individuals should provide evidence for BCEs taken between 6 April 2006 and 5 April 2024, alongside evidence of the deemed BCE calculation that happened at the point of the first BCE.

Schemes must then calculate 25 per cent of the deemed BCE and the tax-free amount of any actual BCEs taken to calculate the amount of available lump sum allowance or lump sum death benefit allowance.

HMRC said that it had disregarded the amount that was crystallised at the deemed BCE at age 75 where the individual has not crystallised further benefits since that date.

However, where they have crystallised further benefits, HMRC has not disregarded this amount as they have the option to apply for a TTFAC.

“The reason for the difference in treatment is that benefits crystallised after age 75 were generally not treated as BCEs and therefore would have been more complicated to take into account,” HMRC stated.

“Individuals aged over 75 who have crystallised further benefits post 75 should consider applying for a TTFAC.

“If an individual reached age 75 before 6 April 2024, used up some LTA under any of BCEs 5, 5A or 5B, and had a refund of excess contribution lump sum paid to them before 5 April 2024, their LTA used at these BCEs should still be included in the transitional calculation and these individuals should have the option of applying for a TTFAC.”

Addressing how schemes should apply the transitional calculation following the ‘age 75 disregard’, HMRC said that an individual will go through the standard transitional calculation, and this will be reported on their annual statement.

“Members will then either notify that they have a TTFAC (requested through another scheme) which will amend their allowances or, at the point they want to crystallise further benefits the scheme will contact the individual to ask if they have accessed further lump sums after age 75," HMRC continued.

“If they haven’t, the standard calculation can be used disregarding any amount crystallised at age 75, or if they have, the individual can apply for a TTFAC if appropriate.”

For schemes receiving a transfer after the age of 75 where tax-free cash has been taken before the transfer, HMRC stated there were not provisions to compel the transferring scheme to pass on details of tax-free cash taken under that scheme after the age of 75, and it would therefore expect receiving schemes to request this information from the member.

“We are aware that there may be other queries that have been raised which are not clarified in this newsletter,” HMRC stated. “We will continue to provide further updates as required.

“Following the abolition of the LTA, the LTA Administration mailbox is no longer being monitored for policy queries and should not be used.

“We are now in the process of updating our guidance to ensure the changes have been captured.”

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