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HMRC internal manual

Pensions Tax Manual

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Protection from the lifetime allowance charge: individual protections 2014 and 2016: applying for individual protection 2014

 

Glossary PTM000001
   

 

“Relevant arrangement” and “relevant amount”
How to apply for individual protection 2014
Information that will need to be given when making an application for individual protection 2014
HMRC confirming receipt of an individual protection 2014 application
Deadline for applying for individual protection 2014
HMRC refusal to accept an application for individual protection 2014
Appeal against HMRC’s refusal to accept an application
Incorrect information provided on the application
Replacement and duplicate certificates
Late applications
When HMRC may revoke a certificate
Actions following a member’s divorce where their pension rights have become subject to a pension debit
Documents relating to an individual protection 2014 application that need to be kept
HMRC reviews the information provided on the online application
Fraudulent or negligent information provided in connection with the notification

The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Note - The legislation talks about giving notice of an intention to rely on individual protection 2014 (IP 2014) but for ease of understanding in this guidance the process for giving notice is referred to as making an application for IP 2014.

An application for IP 2014 must be received by HMRC by 5 April 2017.

If someone wants to apply for IP 2014 then they will need to meet certain conditions. These are that:

This means that a member can apply for IP 2014 where they already have enhanced protection, fixed protection, fixed protection 2014 or fixed protection 2016. Once a member is satisfied that they meet these conditions they can apply to HMRC for IP 2014.

“Relevant arrangement” and “relevant amount”

Paragraph 1(4) and 1(5) Schedule 6 Finance Act 2014

A member has one or more relevant arrangements if on 5 April 2014:

  • they are a member of one or more registered pension schemes, and/or
  • they are a “relieved member” (see PTM113410 for more detail) of a “relieved non-UK pension scheme” (see PTM113410).

The relevant amount is the total value on 5 April 2014 of the member’s pension rights in all their relevant arrangements. An individual can have different types of pension rights and for IP 2014 these have been categorised as Amounts A, B, C and D (See PTM094300).

How to apply for individual protection 2014

Regulations 4(2)(a) and 14 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Paragraph 1 Schedule 6 Finance Act 2014

To get IP 2014 the member will need to complete the online application. The online application must be received by HMRC by 5 April 2017.

Anyone can complete the online application and submit it on behalf of the member. Including the member’s personal representatives where the member dies before 6 April 2017 and before applying for IP 2014.

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Information that will need to be given when making an application for individual protection 2014

Regulation 4(1) The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Applications for IP 2014 must be made using the online application. To complete the application correctly the following details must be completed:

  • confirmation that the member doesn’t have primary protection (see PTM092300),
  • the value of their pension savings, broken down into Amounts A, B, C and D as appropriate, see below,
  • the date and amount of any pension debit to which their pension savings have become subject since 6 April 2014 and before the application is made, and the amount of the discounted pension debit (that is, the amount by which their relevant amount is actually reduced)
  • their full name and address,
  • their date of birth, and
  • their National Insurance number (or if they don’t have a National Insurance number, the reasons for this).
  • A completed declaration declaring that the information they have given is true and complete to the best of their knowledge and belief.

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HMRC confirming receipt of an individual protection 2014 application

Regulation 5 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Once the application has been successfully submitted, the online system will confirm the member has IP 2014 and give details of the amount protected and a unique reference number. This information forms the member’s IP 2014 certificate and will be available for them to view via their online personal tax account. The online service allows the member to print out this information. The member will need to keep this information and give it to their pension scheme(s) if they want to rely on this protection when they come to take their benefits.

Where the member’s IP 2014 is dormant because they have one of enhanced protection, fixed protection or fixed protection 2014 the online system will show that the IP 2014 is held but is dormant. As these other protections are more favourable than IP 2014, the IP 2014 becomes active only if the member has lost the other form of protection and notified HMRC of this, as they are required to do.

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Deadline for applying for individual protection 2014

Applications must be made to by HMRC by 5 April 2017 at the latest.

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HMRC refusal to accept an application for individual protection 2014

Regulation 6 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

HMRC may refuse to accept an application if:

  • it is not made on the online application,
  • all the information required has not been provided, or
  • the application was made to HMRC after 5 April 2017.

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Appeal against HMRC’s refusal to accept an application

Regulations 6(2) and 7 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Where HMRC refuse to accept their application and have not already explained why, the member can require HMRC to give the reasons for their refusal. The member may also appeal against the decision not to accept the application. The member must tell HMRC that they want to appeal against that decision within 30 days of the day when HMRC gave their decision to refuse to accept their application.

Where the appeal is considered by the tribunal, the tribunal will decide whether HMRC was entitled to take the view that:

  • the notice that was given did not satisfy the notification requirements,
  • the notice did not contain the required information,
  • the application was not made using the online application, or
  • the application was not received by HMRC on or before 5 April 2017.

If the tribunal finds that HMRC should have accepted the notice then they may direct them to issue an IP 2014 certificate. If HMRC’s decision is upheld then the member will either have to make a fresh application before 5 April 2017 or, if the decision is that the form was not received before that date, the member will not be entitled to IP 2014.

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Incorrect information provided on the application

Regulations 8 and 10 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Where it is realised that either the information on the online application or any information given to HMRC in connection with the application is incorrect or becomes incorrect later then HMRC must be provided with the correct information without undue delay.

If this information isn’t provided then the member may be liable to penalties.

If HMRC has already issued the IP 2014 ‘certificate’, the details held on the members’ personal tax account will be updated and a new unique reference number will be issued. This will constitute a ‘replacement certificate’ superseding the first ‘certificate’.

For amendments for members who held a paper certificate, prior to the launch of the online service, HMRC will cancel the existing paper certificate and amend the protection details online. The member will then be issued with a new unique reference number. The member will be able to view these details online through their personal tax account.

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Replacement and duplicate certificates

Regulation 10 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

HMRC may issue a ‘replacement certificate’, with a separate unique reference number, if they have reason to believe that:

  • they have received incorrect information on the online application or in connection with the application,
  • the information given has since become incorrect, or
  • the rights under the member’s arrangement have become subject to a pension debit (See PTM094400).

If the original certificate has been mislaid HMRC can issue a duplicate certificate if they think it appropriate to do so.

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Late applications

Guidance relating to late applications can be found at PTM098000.

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When HMRC may revoke a certificate

Regulations 11 and 12 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

HMRC may revoke a certificate if:

  • they have reason to believe that that the member was not entitled to IP 2014 because they did not satisfy one or more of conditions (see below),
  • they have reason to believe that the relevant amount has been reduced below £1.25 million by a pension debit (see below), or

The member’s IP 2014 certificate may also be revoked if the member has failed to respond within the given deadline to a notice given by HMRC under paragraph 1 Schedule 36 Finance Act 2014 relating to the member and IP 2014.

If HMRC revokes a member’s IP 2014 certificate then the member can ask HMRC to give the reasons for this. The member may also appeal against this decision. The member must tell HMRC if they want to appeal against this decision and they must do this within 30 days of revocation.

Where the appeal is considered by the tribunal, the tribunal will decide whether HMRC had ground to do this. If the tribunal allows the member’s appeal then they may tell HMRC to issue the member with an IP 2014 certificate.

If the appeal is refused then the certificate remains either replaced or revoked. A member’s IP 2014 will be based on the replacement certificate or, if the certificate was revoked, they will have lost their IP 2014 from the date of revocation. Any benefits taken after the certificate has been replaced or revoked will be tested against the member’s replacement protected lifetime allowance or the standard lifetime allowance if their certificate has been revoked. But any benefits taken after 5 April 2014, whilst their IP 2014 was set at a higher level and was valid, will not be retested.

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Actions following a member’s divorce where their pension rights have become subject to a pension debit

Regulations 2, 9, 10 and 11 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Paragraph 1(6) and (9) Schedule 6 Finance Act 2014

Where a member’s pension rights are subject to a pension debit, their protected lifetime allowance may be reduced or, if their pension rights are reduced to an amount less than the standard lifetime allowance in force when the pension sharing order or provision takes effect, cease to apply altogether.

If, at any time after HMRC have issued a member with an IP 2014 certificate, their pension rights become subject to a pension debit (PTM094400), a member must inform HMRC about this within 60 days of the date of the pension debit. The date of a pension debit is the date on which the notice of discharge of liability is issued under regulation 8(1) of the Pensions on Divorce etc. (Provision of Information) Regulations 2000 - SI 2000/1048.

HMRC must be given the following information:

  • the date of the pension debit,
  • the amount of the pension debit,
  • the net amount of the pension debit taking into account any required reduction to it

HMRC will if appropriate either

  • issue a replacement certificate, which will supersede the first certificate, or
  • revoke the certificate if the value of a member’s pension rights following the debit has fallen below the standard lifetime allowance.

Any benefit crystallisation events that occurred after 5 April 2014 and before the effective date of the pension sharing order or provision, that is while the IP 2014 was still valid, will be unaffected by the replacement or revocation of the member’s certificate.

If you do not provide this information you may be liable to penalties.

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Documents relating to an individual protection 2014 application that need to be kept 

Regulation 13 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

The member must keep their IP 2014 ‘certificate’ issued by HMRC until no further benefit crystallisation events can occur in respect of their pension savings or until such time as their certificate may be either replaced or revoked .

Copies of the valuation of their pension benefits should not be submitted with the online application. However, the member must keep all documents relating to the calculation of their relevant amount and amounts A, B, C and D (see PTM094300) for six years from the day on which the application is made to HMRC.

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HMRC reviews the information provided on the online application

Paragraph 1 Schedule 36 Finance 2008

Once a successful application for IP 2014 has been made online, HMRC can review any information given on the online application or in connection with the application for the purposes of checking the member’s tax position. HMRC can call for any information or document by notice in writing where this is reasonably required to allow them to check their tax position.

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Fraudulent or negligent information provided in connection with the notification

Section 98(2) Taxes Management Act 1970

A member may be liable to a penalty if they

  • fraudulently or negligently provide false information in connection with any notification (including an enquiry into a notification), or
  • produce or make available an incorrect document to HMRC in connection with any notification (including an enquiry into a notification).

A penalty will be due if as a result of the incorrect information, document or certificate the IP 2014 relevant amount is less than the amount notified to HMRC.

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