PCLS available or not...?

Hi all.

We have a client who, under his old SSAS, used up 80% of his Lifetime Allowance (£1.8M at the time).  40% of the LTA paid out under BCE6 - PCLS payment.

The client subsequently applied for fixed protection to retain the £1.8M LTA.

He has a small uncrystallised pot of circa £80K.  Can he draw tax free cash (PCLS) from it?

On one hand I say yes as he will still have 20% of his LTA available (£360K) so could draw the £20K PCLS from the uncrystallised pot.

On the other hand I say no as he's already received more than 25% of his protected LTA as a lump sum payment (£720,000 lump sum paid from the SSAS as a scheme specific lump sum payment).

Any views?
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Comments

  • The plot thickens.  One platforms technical department says this:

    "The client has already used 25% of available tax free cash so there will not be PCLS available on the uncrystallised wrapper." 

    Another says

    "
    Any benefits now taken, with any Fixed Protection that the member now has obtained, will have as its starting point the fact that 81% of the member’s LTA has been utilised. "
  • Working on a few assumptions:
    SSAS allowed over 25% PCLS as A Day TFC entitlement was over 25% so TFC was protected.
    Uncrystallised pot is separate pension plan PP?

    Is this correct?
  • Richard,
    Correct and correct.

    I am landing on the side of - he's got 19% of his 1.8M LTA left so could still take up to £85,500 PCLS...
  • It is easiest if we break it down into stages.  

    First of all with the SSAS, as there was Protected Tax Free Cash, the only “check” that would have need to have been made was simply is there enough LTA to pay the Protected Tax Free Cash and vest the balance (presumably into drawdown/annuity purchase).  If yes (which was the case) then you simply say they have used 80% of the LTA as a result of that process.  That is the end of that.

    Therefore he has 20% of the relevant LTA remaining.  This means that he can take PCLS of up to 25% of his remaining LTA.  

    (The position would be different if he had Primary Protection with PCLS in excess of £375,000 but that is not relevant here)

  • Thanks Matthew
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