Summary of LTA protection
25 November 2021
Key points
- Fixed protection 2016 and individual protection 2016 can still be applied for
- Only primary protection and individual protection (all versions) allow further funding
- Enhanced protection is the only protection which gives unlimited protection
- It's possible to have more than one type of protection
Jump to the following sections of this guide:
Fixed protection 2016
Eligibility | Anyone who doesn't have enhanced protection, primary protection, fixed protection 2012 or fixed protection 2014 - regardless of the size of their benefits. Any active individual protection 2014 will take precedence, with FP2016 dormant until such time, if ever, that IP2014 is lost. |
Registration deadline | No deadline. |
Level of LTA protection | £1.25M |
Ongoing funding allowed? |
No 'relevant benefit accrual' is allowed, i.e. Money purchase schemes - broadly speaking, no more contributions after 5 April 2016. The exceptions to this general rule are contributions for life cover that was in place before 6 April 2006. Defined benefit schemes - the benefit value can't increase by more than:
|
Tax free cash (TFC) | Generally, 25% of the crystallised value of the benefits, subject to a maximum of 25% of £1.25M. But there are exceptions. |
Can protection be lost? |
Yes, it will be lost if:
|
Individual protection 2016
Eligibility |
Only those who had total benefits (crystallised and uncrystallised) valued above £1M on 5 April 2016 and don't have primary protection or individual protection 2014. Any active enhanced or fixed protection (any version) will take precedence, with IP2016 dormant until the other protection is lost. |
Registration deadline | No deadline. |
Level of LTA protection | The total value of benefits as at 5 April 2016, subject to a maximum of £1.25M. |
Ongoing funding allowed? | Yes. |
Tax free cash (TFC) | Generally, 25% of the crystallised value of the benefits, subject to a maximum of 25% of the protected LTA. But there are exceptions. |
Can protection be lost? | Only on divorce. If pension benefits are subject to a pension debit, the value of their benefits as at 5 April 2016 is recalculated. If the recalculated value is below £1M then the protection is lost. |
Fixed protection 2014
Eligibility | Anyone who didn't have enhanced protection, primary protection or fixed protection 2012 - regardless of the size of their benefits. |
Registration deadline | 5 April 2014 |
Level of LTA protection | £1.5M |
Ongoing funding allowed? |
No 'relevant benefit accrual' is allowed, i.e. Money purchase schemes - broadly speaking, no more contributions after 5 April 2014. The exceptions to this general rule are contributions for life cover that was in place before 6 April 2006. Defined benefit schemes - the benefit value can't increase by more than:
|
Tax free cash (TFC) | Generally, 25% of the crystallised value of the benefits, subject to a maximum of 25% of £1.5M. But there are exceptions. |
Can protection be lost? |
Yes, it will be lost if:
|
Individual protection 2014
Eligibility |
Only those who had total benefits (crystallised and uncrystallised) valued above £1.25M on 5 April 2014 and don't have primary protection. Any active enhanced or fixed protection (2012 or 2014) will take precedence, with IP2014 dormant until the other protection is lost. |
Registration deadline | 5 April 2017 |
Level of LTA protection | The total value of benefits as at 5 April 2014, subject to a maximum of £1.5M. |
Ongoing funding allowed? | Yes. |
Tax free cash (TFC) | Generally, 25% of the crystallised value of the benefits, subject to a maximum of 25% of the protected LTA. But there are exceptions. |
Can protection be lost? | Only on divorce. If pension benefits are subject to a pension debit, the value of their benefits as at 5 April 2014 is recalculated - if this is below £1.25M then the protection is lost. |
Fixed protection 2012
Eligibility | Anyone who didn't have enhanced protection or primary protection - regardless of the size of their benefits. |
Registration deadline | 5 April 2012 |
Level of LTA protection | £1.8M |
Ongoing funding allowed? |
No 'relevant benefit accrual' is allowed, i.e. Money purchase schemes - broadly speaking, no more contributions after 5 April 2012. The exceptions to this general rule are contributions for life cover that was in place before 6 April 2006 and contracted out rebates. Defined benefit schemes - the benefit value can't increase by more than:
|
Tax free cash (TFC) | Generally, 25% of the crystallised value of the benefits, subject to a maximum of 25% of £1.8M. But there are exceptions. |
Can protection be lost? |
Yes, it will be lost if:
|
Enhanced protection
Eligibility | Anyone - regardless of the size of their benefits. |
Registration deadline | 5 April 2009 |
Level of LTA protection | Unlimited - as long as enhanced protection remains valid there will be no LTA tax charge, regardless of the value of benefits paid. |
Ongoing funding allowed? |
No 'relevant benefit accrual' is allowed, i.e. Money purchase schemes - broadly speaking, no more contributions after 5 April 2006. The exceptions to this general rule are contributions for life cover that was in place before 6 April 2006 and NI rebates to contracting out plans that were in place before 6 April 2006. Defined benefit schemes - contributions can continue after 5 April 2006. But the restriction for these schemes is a limit on the size of benefit that can be paid out. The crystallised value of any benefits taken, or the actual value transferred out, can't exceed the appropriate limit. Broadly speaking, the appropriate limit is the value of the benefits built up under the scheme at 5 April 2006, increased by the greater of:
|
Tax free cash (TFC) |
Registered TFC - if total TFC rights exceeded £375,000 at 5 April 2006 (including a notional value for pensions in payment) then TFC rights would be registered as a protected TFC percentage. Each time the individual draws benefits, the registered percentage of the crystallised value of the benefits being taken can be paid as TFC. No registered TFC - Generally, 25% of the lower of:
But there are exceptions. |
Can protection be lost? |
Yes, it will be lost if:
|
Primary protection
Eligibility | Only those who had benefits (crystallised and uncrystallised) valued above £1.5M at 5 April 2006. |
Registration deadline | 5 April 2009 |
Level of LTA protection |
An enhancement factor boosts the person's LTA. This is calculated as: The way the person's LTA is then calculated depends on when benefits are crystallised:
Example - Jim has an enhancement factor of 0.37. If he takes his benefits in 2020/21, he'll have a LTA of £2,466,000 (1.37 x £1.8M). |
Ongoing funding allowed? | Yes. |
Tax free cash (TFC) |
Registered TFC - if total TFC rights exceeded £375,000 at 5 April 2006 (including a notional value for pensions in payment) then TFC rights would be registered as a protected TFC amount. The registered amount is increased by the growth in the standard LTA between 6 April 2006 and the date that the benefits are taken. For benefits taken after 5 April 2012, this increase is calculated using an 'underpinned' LTA of £1.8M. No registered TFC - Generally, 25% of the lower of:
But there are exceptions. |
Can protection be lost? |
Only on divorce. If pension benefits are subject to a pension debit, the LTA enhancement factor has to be recalculated. Primary protection will be lost if the pension debit reduces the value of the member's pension rights as at 5 April 2006 to a figure that's below £1.5M. |
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