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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15976
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I retired from NHS GP practice in April 2014. I had been

Customer Question

I retired from NHS GP practice in April 2014.
I had been paying into NHS superannuation scheme and had accrued a lifetime allowance of £1,648,289.
I have received a lump sum and have been drawing my penion since 2nd April 2014. This has been the excess of my lifetime allowance has been taxed by Scottish Public Pension Agency.
Over the years I had also been paying into a private pension and I stopped contributions to this before I retired. I had claimed tax on contributions to this pension over the years.
The pension pot of this private pension is now £82,000.
Is it possible to protect this amount from further tax?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi. I'm afraid that won't be possible unless at some point since 2006 you protected the value of all your pension funds which is what the lifetime allowance charge is based on as it was reduced from a start point in 2006 of £1.8 million to £1.5 million, £1.25 and to £1 million with effect from 6 April 2016. If you consult the provider of the private pension with a view to taking the benefits, they should ask you what other pension funds you have had and base your choices and the tax implications around the information you provide them with. There is information on the lifetime allowance charge here and here. I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.
I have no protection but I stopped contributions and took my pension before the £1.25M came into effect. I am worried that if i now declare that I have a further fund that the £1.25M will come into force and I will lose more than the private fund. What do you suggest?
Expert:  TonyTax replied 2 years ago.
If you take it all as cash, you will pay 55% tax. You won't lose it all but it should have been included in any declaration of your total pension funds.
If you never took any protection, then the limit that was in force when you took your NHS fund will apply to you. The LTA was reduced from £1.5 million to £1.25 million in 2013/14 so I suspect you are affected by that limit or the previous £1.5 million limit. Given the size of the NHS fund exceeded £1.5 million and £1.25 million, the private fund is exposed in any event.
If I were you, I'd discuss your options with an independent financial adviser before you commit to any course of action but I suspect they will tell you the same as I have but I don't think you will have the limit that applied to you when you took your NHS pension benefits changed as far as that fund is concerned.
Expert:  TonyTax replied 2 years ago.
I'm just following up to find out if my answer helped or if you have any further questions.