Protected tax-free cash on transfer
Individuals may have a protected tax-free cash entitlement to more than 25% of their pre-6 April 2006 benefits. This can be lost if they choose to transfer their benefits to another pension scheme.
Here we look at the types of transfer that allow this higher protected tax-free cash entitlement to be kept.
Key facts
Protected tax-free cash is lost on transfer unless it's one of the following:
- It's a block (or buddy) transfer.
- It's a wind-up transfer.
- The individual has registered for primary or enhanced protection.
Further information
- HMRC Pensions Tax Manual PTM063130: Scheme-specific lump sum protection - overview
- HMRC Pensions Tax Manual PTM062240: Block transfers
- HMRC Pensions Tax Manual PTM062240: Winding-up
- HMRC Pensions Tax Manual PTM176200 - Primary Protection
- HMRC Pensions Tax Manual PTM176300 - Enhanced Protection
- HMRC Pensions Tax Manual PTM176340 - Lump sum allowance and lump sum and death benefit allowance: Enhanced protection: Cessation events
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.