On 18th August HMRC opened applications for Individual Protection 2014 (IP2014) which presents a new opportunity for pensions savers to protect their pension savings if they exceed the current standard Lifetime Allowance (LTA) of £1.25 million and from future falls in the LTA.
IP2014 will apply retrospectively from 6 April 2014 and will be available to individuals with pension savings of more than £1.25m on 5 April 2014. It gives individuals a personalised LTA equal to the value of their pension savings on 5 April 2014 up to a maximum of £1.5m.
IP2014 will remain in place if an individual makes further pension savings but any pension savings greater than the protected LTA will be subject to LTA tax charges. Applications must be received by HMRC no later than 5 April 2017.
Barnett Waddingham head of executive pensions Bhargaw Buddhdev says: “Individuals who had pension savings over £1.25 million on 5 April 2014 and do not have primary protection should apply for IP2014. For individuals with enhanced protection or either form of fixed protection, IP2014 can offer a safety net where the earlier LTA protections could inadvertently be lost. Individuals should seek advice to avoid unnecessary tax bills.”