RPSM13102540 - Technical Pages: International: Application of charges to non-UK schemes: Lifetime allowance: Relevant relieved amount

Relevant relieved amount

Paragraph 14 of schedule 34 provides for an overall limit on the total amount that may be tested against an individual's lifetime allowance where the benefits of a relieved member of a relieved non-UK pension scheme are crystallised. This ensures that only amounts in the relieved non-UK pension scheme that have received UK tax relief after 5 April 2006 are tested against the lifetime allowance. The overall limit on the amount that may be tested is the relevant relieved amount.

The relevant relieved amount relating to the individual under the scheme is the aggregate of:

• the total pension input amounts as they apply by virtue of schedule 34 ( RPSM13102350 to RPSM13102380 refer) that have arisen in relation to that scheme in each tax year after 5 April 2006 in respect of the individual, and
• the pension input amount that would have applied by virtue of schedule 34 if the period beginning on 6 April in the tax year in which the benefit crystallisation event occurs and ending immediately before the benefit crystallisation event was a full tax year.

When making this calculation you must assume that section 229(3) does not apply. That provides that there is no pension input amount for a tax year if, before the end of the tax year, the individual has become entitled to all of their benefits under the scheme or has died.

At each benefit crystallisation event ( RPSM11100040 refers) the amount crystallised is reduced by any excess over the untested portion of the relevant relieved amount in order to determine the crystallised amount to be tested against the individual's lifetime allowance. The untested portion of the relevant relieved amount is the total relevant relieved amount less all the amounts previously crystallised in respect of the individual under the relieved non-UK pension scheme.

So at the first benefit crystallisation event the amount crystallised is reduced by any excess over the relevant relieved amount. If the member has a second benefit crystallisation event in that relieved non-UK pension scheme, the amount crystallised is reduced by any excess over the relevant relieved amount less the amount crystallised at the previous benefit crystallisation event. This process will continue for any subsequent crystallisations of the member's benefits under the scheme until the relevant relieved amount is zero. After that there is no amount to test against the individual's lifetime allowance.

RPSM13102550 and RPSM13102560 give some examples.