Examples of calculating the Lifetime Allowance

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Sandra retires on 31 May 2018

 
LGPS annual pension £25,000  
LGPS lump sum £45,000  
AVC taken as lump sum £116,375
 
Capital Value of benefits £661,375  
(£25,000 x 20 + £45,000 + £116,375)
 
Sandra has not drawn any pension benefits previously; the capital value of her benefits is less than the LTA limit for 2018/19 of £1,030,000. She has used 64.21% of the available LTA.
 
 

Patrick retires on 31 May 2018

     
LGPS annual pension £50,000  
LGPS lump sum £120,000  
Capital Value of benefits £1,120,000  
(£50,000 x 20 + £120,000)    
 
 
 
Tax charge payable on benefits in excess of £1,030,000
(£90,000/20 x12 x 55%)
£29,700 Tax charge
   
This example assumes Patrick has not taken payment of any pension benefits previously; he has not applied for any LTA protection and has opted to be paid the benefits in excess of the LTA as a lump sum. He has used 100% of the available LTA.