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HMRC internal manual

Pensions Tax Manual

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HM Revenue & Customs
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Protection from the lifetime allowance charge: lifetime allowance enhancement factors: overview

Glossary PTM000001
   

Sections 218(5) to (5BD) Finance Act 2004

Paragraphs 7 to 11(D) Schedule 36 Finance Act 2004

In certain circumstances, individuals may be entitled to one or more lifetime allowance enhancement factors. When an individual qualifies for a lifetime allowance enhancement factor the result is that their lifetime allowance is increased by the factor when a benefit crystallisation event occurs. There is more specific detail later or elsewhere in this guidance (as indicated below), but the circumstances in which the right to a lifetime allowance enhancement factor can arise are broadly where:

  • pension rights of more than £1.5 million have been accrued as at 5 April 2006. This factor is known as the primary protection factor - see PTM092300 for more detail.
  • a pension credit is acquired on or after 6 April 2006 in relation to rights under another registered pension scheme which consisted of or included rights to a pension already in payment and which came into payment on or after 6 April 2006. This factor is known as the pension credit factor - see PTM095200 for more detail.
  • a pension credit was acquired before 6 April 2006.  This factor is known as the pre-commencement pension credit factor - see PTM092200 for more detail.
  • certain benefits have been accrued in a registered pension scheme by an individual during a period when they were a relevant overseas individual.  This factor is known as the non-residence factor - see PTM095300 for more detail.
  • benefits have been accrued in a recognised overseas pension scheme and are then subsequently transferred to a registered pension scheme. This factor is known as the recognised overseas scheme transfer factor - see PTM095400 for more detail.