| [s221-226)] |
The
lifetime allowance is an overall ceiling on the
amount of UK tax-relieved pension savings that an individual can
draw from
registered pension schemes and certain overseas
pension schemes. If when a
benefit crystallisation event occurs (see example
at
RPSM11102040) the total value of an
individual's benefits exceeds their unused lifetime allowance then
that individual will be subject to a
lifetime allowance charge (
RPSM11103000 refers).
Everyone is entitled to the
standard lifetime allowance, which is
£1.5million in the 2005/06 tax year and will increase in
subsequent years. However, in certain circumstances an individual
can notify HMRC that they are entitled to a lifetime allowance that
is higher than the standard amount: an “enhanced”
lifetime allowance. If so, a lifetime allowance charge would only
arise when a benefit crystallisation event occurred if the total
value of that individual's benefits exceeded their unused enhanced
lifetime allowance.
An individual can notify HMRC of an entitlement to enhance
their lifetime allowance in two international situations in which
benefits in a registered pension scheme are built up without UK tax
relief. These are
Even if an individual is entitled to enhance their lifetime allowance they may not need to do so. A notification will be beneficial where the total value of an individual's UK tax-relieved pension scheme benefits is likely to exceed the standard lifetime allowance.
| Glossary ( RPSM20000000) |
