From 6 April 2024, HMRC has abolished the Lifetime Allowance, introducing two new allowances: the Lump Sum Allowance, and the Lump Sum and Death Benefit Allowance.
This Transitional Tax-Free Amount Certificates hub provides you with all of the information, background on the changes and how you can apply for a Transitional Tax-Free Amount Certificate (TTFC) if you're eligible.
You can also get in depth explanations of many of the terms below, and check if you can apply for a transitional tax-free amount certificate via the new tool on the HMRC website.
From 6 April 2024, HMRC has abolished the Lifetime Allowance, introducing two new allowances: the Lump Sum Allowance and the Lump Sum and Death Benefit Allowance.
Any Lifetime Allowance used before 6 April 2024 counts towards your available Lump Sum Allowance after this date.
The new rules assume that you took the maximum 25% of each benefit crystallisation event as tax-free cash before 6 April 2024, regardless of the actual amount taken.
If you took less than the 25% tax-free cash or meet other specific conditions, a tailored assessment of your Lump Sum Allowance might benefit you.
To get this tailored assessment, you need to apply for a Transitional Tax-Free Amount Certificate (TTFC). Any pension scheme you have benefits with can issue this certificate.
You must apply for a TTFC before you first access any of your pension scheme benefits after 6 April 2024.
TTFCs are issued at the member level, not the scheme level. You can only apply to one scheme, but it will cover benefits paid from all your pension schemes.
Important - Once the TTFAC is issued it will always apply and you will not be able to revoke it. It can be cancelled by a scheme administrator if it is found to be incorrect.
If you’re applying for a Transitional Tax-Free Amount Certificate (TTFC), please read the information sheet and the relevant section of HMRC’s Pensions Tax Manual first to ensure you're eligible and have all the information you need.
Save a copy of the information sheet for future reference.
The application form includes technical terms defined in the Information Sheet's Glossary.
Contact any other schemes you’ve received benefits from to get the required evidence before starting. You can't submit your application without these attachments.
Civil Service Pensions cannot contact other schemes on your behalf.
You won’t need to submit supporting evidence if the only benefits received are from the Civil Service Pension Scheme.
There’s a checkbox on the form to confirm this applies to you. You’ll need to confirm you’ve read and understood the eligibility criteria, and that the evidence you submit is complete and accurate.
The regulations state that, when a scheme receives an application from an individual, they must either issue a certificate (if the application is valid) or provide the applicant a notice of refusal within 3 months of receipt.
Civil Service Pensions will respond to TTFC applications within 55 working days.
We aim to respond within 10 working days for requests for information to support an application from another scheme, but in some cases, this may take longer.
We’re sorry, but we can’t expedite applications.
The glossary below is designed to give a general understanding of some of the technical terms used in this information sheet and elsewhere. It is not designed to cover every eventuality.
In depth explanations of many of the terms below can be found on the HMRC website.
The maximum amount of cash available at each benefit crystallisation event. This is usually determined by the fund value (for defined contribution benefits) or in relation to the level of defined benefit pension coming into payment
Testing any uncrystallised benefits against the individual's Lifetime Allowance (LTA) at the maximum age of 75.
Certain pension scheme actions. For example, a retirement, transfer, death, or where a Lifetime Allowance (LTA) test was triggered. The benefits being paid would be measured against the individual’s LTA and usually expressed as a percentage of this allowance. Some payments, such as small-pot or trivial commutation, are not benefit crystallisation events.
Testing an individual’s pension against the Lifetime Allowance when a pension in payment is increased beyond certain statutory thresholds.
Where an individual's benefits are transferred overseas but certain benefits, such as GMP, are retained in the UK scheme and will be tested against the Lifetime Allowance.
The value of the benefits crystallised for Lifetime Allowance purposes. In defined contribution schemes this is typically the fund value. In defined benefit schemes this is typically the amount of pension brought into payment, multiplied by 20, plus the face value of any pension commencement lump sum.
Defined Benefit (DB) schemes provide members with guaranteed benefits determined by the scheme’s rules, instead of the contributions paid in. The PCSPS and alpha are defined benefit schemes.
Defined Contribution (DC) schemes invest member and employer contributions and provide the member with a ‘pension pot’ at retirement instead of a guaranteed set of benefits.
A pension credit paid upon divorce from a scheme member's crystallised benefits, for example a pension credit derived from a pension already in payment.
The minimum amount of pension a scheme must pay you. GMPs were accrued in schemes which were 'contracted out' of the state second pension (S2P, SERPS) between 6 April 1978 and 5 April 1997. Members and employers paid a lower rate of National Insurance in exchange for the scheme agreeing to pay benefits which were broadly comparable to the S2P.
A GMP is typically incorporated into an individual’s Defined Benefit pension and is not an extra amount paid on top.
The maximum amount of benefits an individual can take from a pension scheme at a benefit crystallisation event without incurring tax charges or having their benefits subjected to certain restrictions.
A fixed or individual Lifetime Allowance, typically higher than the standard Lifetime Allowance.
A tax-free lump sum paid as part of a package of retirement benefits, such as taking a defined-benefit pension or part of a defined-contribution 'pot' before buying an annuity.
Where an individual becomes entitled to the payment of a lump sum on or after 6 April 2024 which will be tested against the Lump Sum Allowance (LSA) or Lump Sum and Death Benefit Allowance (LSDBA).
An individual ‘becomes entitled’ to a lump sum when they have fulfilled all necessary steps for the scheme to make the payment, such as reaching their retirement date and providing their payment details.
A one-off tax-free lump sum paid in lieu of a lifetime pension, to members of defined benefit schemes who have been certified as having a life expectancy of less than 12 months.
A pension commencement lump sum paid from uncrystallised funds in a money-purchase defined contribution scheme.
The PCSPS and alpha do not pay UFPLSs. Members with a Civil Service Additional Voluntary Contribution Scheme (CSAVCS) account or partnership pension account may have this option and should speak to their provider directly
If you've read the above information and would like to apply for a Transitional Tax-Free Amount Certificate (TTFC), then you can apply here: