Lifetime Allowance protection notifications

9 January 2009

Contents

Introduction

This guidance covers notifications of lifetime allowance protection in the run up to the deadline of 5 April 2009. We have changed form APSS200, which you use to notify us, to make it clearer which boxes you need to complete. We have also amended the completion notes (PDF 55K) for questions 3 and 4. Select the link to the new version of form APSS200 (PDF 73K) (Notification of claim to life time allowance) which you must use from today. None of the questions have been changed. If you have already successfully completed an APSS 200 you do not need to make a change to your notification unless you have discovered that notification is incorrect.

What is lifetime allowance protection?

When you crystallise benefits valued more than the lifetime allowance the amount over the lifetime allowance will be liable to a tax charge called the lifetime allowance charge. When introduced on 6 April 2006 the lifetime allowance was £1.5 million. Currently the lifetime allowance is £1.65 million.

Lifetime allowance protection means that part or all of your benefits that are worth more than the lifetime allowance will be protected from the lifetime allowance charge. There are two main forms of protection:

  • Enhanced protection - protects all your pension rights from the lifetime allowance charge. Strict conditions must be met to continue to be covered by enhanced protection - see RPSM03104065.
  • Primary protection - broadly this protects the value of all your pension rights built up before 6 April 2006 from the lifetime allowance charge - see RPSM03201020. So if on 5 April 2006 your pension rights were worth £3 million you can take this amount of benefits without being liable to the lifetime allowance charge. This value is increased each year in line with the increase in the lifetime allowance, so that your £3 million as at 5 April 2006 would now be worth £3.3 million.

Who can claim lifetime allowance protection?

It is the individual scheme member who must make the notification for protection. There are limited circumstances where someone other than the individual can complete the notification - see RPSM03100520.

Only individuals who already had pension rights worth more than £1.5 million on 5 April 2006 can qualify for primary protection.

There is no monetary limit for enhanced protection.

Is there a deadline for notifying my claim to lifetime allowance protection?

The deadline for submitting your notification that you wish to claim lifetime allowance protection is 5 April 2009.

Up to what date will HM Revenue & Customs treat a notification as having been made on time

If your notification is acceptable (see what is an acceptable notification) and has been received in one of HM Revenue & Customs (HMRC's) offices by midnight on 6 April 2009 it will be treated as being made on time.

Is there a form to make my notification on and where do I get it from?

You need to download the form APSS200 (PDF 73K) from the HMRC website.

What happens if my notification is received after the deadline by HMRC?

Any notification received after midnight on 6 April 2009 will be considered on a case by case basis on its own facts to see if there is a reasonable excuse for it being late and whether the notification was made within a reasonable period of time after that excuse ceased to exist. A reasonable excuse can only exist where an exceptional event beyond your control prevented you from submitting the notification in time. There has been a period of 3 years from 6 April 2006 to 5 April 2009 allowed for making the claim.

What is an acceptable notification?

  • Your notification to claim the Life Time Allowance protection is made using form APSS200 (PDF 73K).
  • All appropriate sections of the form are completed where there is an instruction starting 'You must'.
  • The form is signed and dated.

Note: Photocopies, emails and facsimiles of completed forms will not be accepted.

What are the most common errors made in notifications?

Boxes on the form which require completion are left blank resulting in rejection - please note 'nil' or 'N/A' should be entered when appropriate for the avoidance of doubt.

Only one tick box is completed in the signed declaration at part 5.

Conflicting information is given on the form when an individual is claiming both protections creating an 'obvious error', eg question 3.6 (for enhanced protection) and 4.4 (for primary protection) request the same information, and 3.7 should equal the sum of 4.1a and 4.1b.

What happens if my notification is not acceptable?

For reasons of confidentiality unacceptable notifications will be returned directly to you (unless we have your authority to deal with someone else on your behalf such as a financial advisor). We will be prioritising the notifications so they are returned to you (where appropriate) as quickly as possible.

What are the consequences of missing the deadline?

If you miss the deadline and you do not have a reasonable excuse for making a late application you will not have protection form the lifetime allowance charge. Any benefits that you take (or are deemed to take under the tax legislation) worth more than the lifetime allowance will be liable to the lifetime allowance charge. Where the excess over the lifetime allowance is taken as a lump sum the tax rate is 55 per cent. Where taken in pension form the rate of the lifetime allowance charge is 25 per cent - see RPSM11201020 and RPSM11201030.

How long will I have to wait to find out if my notification is acceptable?

We will aim to notify you immediately where your form is unacceptable. If your form is acceptable then we will aim to tell you that within 15 working days.

Can I amend a notification after the deadline?

If you discover after 6 April 2009 that a notification you made before that date is incorrect you can amend it. You should do this as soon as possible. You will need to submit a new, fully completed APSS200 with the corrected information, completing question 1.6 to confirm the form is an amendment to your original notification and providing the reference number of your existing protection certificate.

Where do I send my notification?

You need to send your completed notification to:

HM Revenue & Customs
Pension Schemes Services
Yorke House
Castle Meadow Road
Nottingham
NG2 1BG

Contact us

If you have any questions about anything to do with lifetime allowance protection and you cannot find the answer in the Registered Pension Schemes Manual, please contact us by email or phone our helpline on Tel 0845 600 2622 (9.00 am to 5.00 pm Monday to Friday) or write to us at the address shown in the paragraph above.