Before 6 April 2024 fixed protection maintained the lifetime allowance at a certain level depending on which fixed protection the individual has. There are now three different versions. It now provides for a higher lump sum allowance and lump sum and death benefit allowance.
Key facts
- Fixed protection 2012 gives individuals a protected lump sum and death benefit allowance of £1.8 million.
- Fixed protection 2014 gives individuals a protected lump sum and death benefit allowance of £1.5 million.
- Fixed protection 2016 gives individuals a protected lump sum and death benefit allowance of £1.25 million.
- Unlike individual protection there is no minimum benefit value needed to apply for fixed protection.
- The deadline for applying for fixed protection 2016 is 5 April 2025.
What is fixed protection?
When originally introduced, fixed protection maintained the lifetime allowance at a certain level depending on what type the individual has.
Since 6 April 2024, when the lifetime allowance was abolished, fixed protection maintains a higher lump sum allowance and lump sum and death benefit allowance.
These allowances are fixed monetary amounts, which are used up when tax-free lump sums are paid in respect of the individual. It is important to note that the figures below are the maximum amounts that can be paid, and any tax-free lump sum benefits taken before 6 April 2024 will reduce the amounts available to be paid tax free.
There are three different versions:
| Type | Lump sum allowance | Lump sum and death benefit allowance |
|---|---|---|
| Fixed protection 2012 | £450,000 | £1.8 million |
| Fixed protection 2014 | £375,000 | £1.5 million |
| Fixed protection 2016 | £312,500 | £1.25 million |
Can anyone apply?
Most restrictions on who can apply for fixed protection 2016 relate to other protections.
- You can’t have primary protection.
- You can’t have enhanced protection.
- You can’t have any earlier version of fixed protection, for example you can't apply for fixed protection 2016 if you had either fixed protection 2012 or 2014.
- Unlike individual protection there is no minimum benefit value needed to apply for fixed protection.
- If an individual applied for fixed protection 2016 on or after 15 March 2023, they can only do so if they have not made a pension contribution or had any benefit accrual since 6 April 2016.
Can you lose fixed protection?
Yes, before 6 April 2023 to keep fixed protection applied for before 15 March 2023 an individual:
- couldn't start a new arrangement other than to accept a transfer of existing pension rights
- couldn't have benefit accrual prior to 6 April 2023
- was subject to restrictions on where and how they can transfer benefits
If the individual broke one of these conditions fixed protection was lost. The individual must tell HMRC if fixed protection is lost.
If somebody applies for fixed protection on or after 15 March 2023, fixed protection will be lost if an individual:
- starts a new arrangement other than to accept a transfer of existing pension rights
- has benefit accrual from 6 April 2016
- will be subject to restrictions on where and how they can transfer benefits
It is possible to have both fixed and individual protection.
The individual must tell HMRC if fixed protection is lost.
Can you lose fixed protection on transfer?
For individuals who applied for fixed protection before 15 March 2023, from 6 April 2023 there are no restriction on transfers between registered pension schemes.
For individuals who apply for fixed protection from 15 March 2023, the following table sets out the conditions for transfers that preserve fixed protection.
| Type of plan | Transfer of conditions |
|---|---|
| Money purchase (other than cash balance) benefits | Can only be transferred to another money purchase arrangement under a registered pension scheme. |
| Defined benefits and cash balance benefits |
Can be transferred to:
|
What other types of protection from the lump sum allowance and lump sum and death benefit allowance are there?
Before fixed protection was introduced, it had been possible to protect pre-6 April 2006 benefits using primary and enhanced protection. Prior to 6 April 2024, this protected 6 April 2006 benefits from the lifetime allowance which has now been replaced by the lump sum allowance/lump sum and death benefit allowance. It is no longer possible to apply for primary and enhanced protection.
How primary and enhanced protection work is explained in our article primary and enhanced protection.
There is also individual protection, more details on this can be found in our individual protection article.
How do you apply for fixed protection?
Any individual who wishes to apply for protection has to do so online. The deadline for applying for fixed protection 2016 and individual protection 2016 is 5 April 2025.
The individual will need an HMRC Online Services Account - if they do not already have one, they will have to create an account.
Details of their protections will be held on their online account.
Individuals will no longer receive paper certificates with their protection details.
Guidance to help individuals who wish to apply for protection has been published by HMRC on GOV.UK.
What if an individual has a temporary reference number?
Individuals that used the interim paper process (before 31 July 2016), but have not followed this up with an online application, will continue to have their savings protected and there will be no tax consequences, provided they have not lost their protection.
However, if the individual has further benefits to crystallise they must apply online to get a permanent reference number. Scheme administrators can use HMRC’s ‘look up service’ to check the level of protection and only permanent reference numbers will be recognised.
This means that until the individual has a permanent reference number the payment of benefits will be delayed or income tax may be applied.
Disclaimer
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.