Lifetime allowance

If your benefits are more than the lifetime allowance, you may have to pay more tax.

The lifetime allowance has been fixed by HMRC and is reducing from £1.8 million to £1.5 million for the tax year beginning 6 April 2012.

If the total value of your pension benefits from all sources (not just DMGT) is more than the lifetime allowance (or your own personal lifetime allowance, if this applies to you), you will be taxed on the extra at a very high rate.

Your own personal lifetime allowance includes any enhanced protection that you may have applied for under the 2006 simplification rules.

If you expect your pension savings to be more than £1.5 million when you come to take your benefits on or after 6 April 2012 you can apply for fixed protection. This will protect your benefits from the lifetime allowance change. You must apply for fixed protection on or before 5 April 2012.

You may choose to leave the scheme at any time if you believe that you will be affected by the lifetime allowance. Please contact us for more details if you find yourself in this position.

You can find out more about the lifetime allowance on the HMRC website.