Navigating Lifetime Allowance (LTA) Changes for Advisers

Read our Techzone Insight to understand which clients may benefit from applying for TTFA.

• Individuals must be a member of one of our pension schemes to apply
• Individuals cannot apply if they have already had a relevant benefit crystallisation event occur on or after 6 April 2024
• Individuals whose only pension in payment is a pre-commencement pensions (pre 6 April 2006)  and have not had any BCEs between 6 April 2006 and 5 April 2024 cannot apply for a TTFAC
• Individuals who have a pre-commencement pension in payment, but they have had one or more BCEs between 6 April 2006 and 5 April 2024, will be eligible to apply for a TTFAC
• Individuals can only apply once.

• It may not be in the individuals’ best interests for example where they’ve had a scheme specific TFC.
• An individual cannot withdraw the request after the TTFAC has been granted even if the calculation means they are entitled to less tax-free cash.
• Once issued, transitional tax-free amount certificates (TTFAC) cannot be revised or updated. However, if a certificate is found to be inaccurate and is cancelled, the member may make another application for a certificate if they have not yet had a relevant benefit crystallisation event. 
• TTFAC requests can be withdrawn up to the point at which the certificate is granted.

The individual must submit complete evidence of their lump sum transitional tax-free amount and their lump sum and death benefit transitional tax-free amount to the registered pension scheme. Complete evidence must always account for the total amount of lifetime allowance used before 6 April 2024 so that a scheme administrator can determine the portion of the pension benefits that were taken as tax-free lump sums.

It is for the scheme administrator to decide if the evidence provided is sufficient. They will need to consider the evidence on a case-by-case basis.

We will accept the following as evidence of tax-free cash taken from other providers:

• Benefits Crystallisation Event (BCE) certificate; AND
• Letter confirming the amount of tax-free cash on headed paper from the scheme: OR
• Settlement letter from the pension provider confirming the amount(s) of lump sum(s) paid. 
• If no Tax Free lump sums have been paid, please confirm this to us in writing.

NB – letters don’t have to be dated at the time of event; we will accept a recent letter from scheme.

We will accept original documents, a photocopy or a photo of the letter on an email.

You could also provide as additional supporting evidence to the BCE certificate:

• Financial records/bank statements showing the amounts paid into the customers bank account.

Evidence must be uploaded to the client’s document library. 

The rules confirm that providers have 3 months to issue the TTFAC from the date of application.  If we don’t receive sufficient evidence within this 3 month period, we must cancel your request. You can reapply on behalf of your client but only where you are able to provide sufficient evidence. 

If your client's only plan is on Wrap or Elevate, please complete the TTFAC application form.

1. The TTFAC application form should be uploaded to the client’s Wrap or Elevate document library. We do not require evidence of tax-free cash taken as we can access this from our records.
2. Please emailnontelephony.drawdown@aberdeenplc.com for Wrap and for Elevate elevate_enquiries@aberdeenplc.com to confirm these have been uploaded. Please also confirm in this email that your client holds only one plan.

The rules confirm that providers have 3 months to issue the TTFAC from the date of application.

Guidance has been issued by HMRC on the rules around obtaining a Transitional Tax Free Amount Certificate (TTFAC). An individual (or the individual’s personal representatives if the individual is deceased) may apply for a certificate to any registered pension scheme of which they are a member. Individuals may wish to apply to the registered pension scheme under which they crystallised most of their pension benefits prior to 6 April 2024, or under which they expect to have their first relevant benefit crystallisation event after this date.

An individual must apply for a certificate before the first relevant benefit crystallisation event, after 5 April 2024. It is not possible to apply after the first relevant benefit crystallisation event - an individual can only apply once. Drip feed drawdown which includes a TFC element is considered a relevant benefit crystallisation event.  Once your client has received their TTFAC, it is binding and cannot be revoked so it is important before applying that you ensure that a TTFAC is the right option for your client.

To apply for a TTFAC, please:

1. Check your client is eligible to apply for a TTFAC ‘Who is eligible to request a Transitional Tax-Free Amount Certificate (TTFAC)’
2. Complete our TTFAC application form
3. Please upload the TTFAC application and appropriate evidence to your clients' Wrap or Elevate document library
4. Please email nontelephony.drawdown@aberdeenplc.com for Wrap and for Elevate elevate_enquiries@aberdeenplc.com to confirm these have been uploaded.

Important Points to Note:

• The rules do not allow providers to do comparisons for customers on whether a TTFAC should be requested or not.
• We are not allowed to take instructions from Advisers for TTFACs for multiple clients, for example we will not accept a spreadsheet containing data across a number of clients.  Requests must be made for each individual client by completing our TTFAC application form.   
• If your client does not intend to use their TTFAC straight away, please do not request a TTFAC until your client intends to use it.  This will allow us to focus our resources on customers who need their TTFAC to access income now so there is no delay to them receiving payments from us.
• As the rules require clients to request a TTFAC, we may ask you to provide evidence of your client’s authority to request a TTFAC.
• We are obligated to take instruction from clients, so if your client contacts us to request a TTFAC we will refer them to you in the first instance but if they are insistent, we will have to provide the TTFAC. This may result in them having access to less tax-free cash than they would otherwise have been entitled to.
• The rules confirm that providers have 3 months to issue the TTFAC from the date of application. If we don’t receive sufficient evidence within this 3 month period, we must cancel your request. You can reapply on behalf of your client but only where you are above to provide sufficient evidence. 

We have updated our Techzone site to reflect the new allowances and cover which clients might benefit in this Insight. We have also added a decision tree, practical guides and case studies to support you.

If your client has LTA protection and you haven’t told us about it already, please get in touch to let us know. This will ensure this information is not lost when it comes to crystallising benefits in the future.

You can do this by uploading supporting evidence to your clients' Wrap or Elevate document library and then emailing nontelephony.drawdown@aberdeenplc.com for Wrap and for Elevate elevate_enquiries@aberdeenplc.com to confirm.

HMRC provided a series of key Q&As in one of their Pension Schemes Newsletters when they introduced the new allowances.

They have also updated the Pensions Tax Manual which is another valuable source of guidance.