RPSM13102550 - Technical Pages: International: Application of charges to non-UK schemes: Lifetime allowance: Example 1 of the relevant relieved amount

Example 1 of the relevant relieved amount

Carmine has a fund value of £2 million. On 6 January 2007 he became a relieved member of a relieved non-UK pension scheme. That is the only scheme of which he is a member. His benefits crystallise on 6 July 2012, at which point he has been a relieved member of the relieved non-UK pension scheme for five and a half years. The amount crystallised is £200,000 and there have been no previous benefit crystallisation events from the scheme.

His pension input amounts for the previous six tax years (2006-2007 to 2011-2012) amount to £300,000 and his pension input amount for the period from 6 April 2012 to 6 July 2012 is £15,000. The untested portion of his relevant relieved amount at the date of the benefit crystallisation event is therefore £315,000. As the amount crystallised does not exceed his relevant relieved amount it is not reduced and so the whole of the crystallised amount of £200,000 is tested against his lifetime allowance of £1.85 million. So he is not liable to a lifetime allowance charge.

Two years later Carmine has another benefit crystallisation event. His pension input amounts for those two years were nil. The amount crystallised is £150,000. The untested portion of his relevant relieved amount is £115,000 (£315,000 less £200,000). The amount crystallised is reduced by £35,000, the excess over the untested portion of his relevant relieved amount, so only £115,000 is tested against Carmine's unused lifetime allowance. Again, he is not liable to a lifetime allowance charge.

A year later Carmine has another benefit crystallisation event. His pension input amount for that year was nil. The amount crystallised is £50,000, but no amount is tested against his lifetime allowance. That is because there is no longer any untested portion of his relevant relieved amount so the £50,000 is reduced to nil by the £50,000 excess.