This flexibility can be useful, particularly if a client holds both DB and DC schemes – the DC scheme can be selected to pay the charge and therefore not reduce the potentially more valuable DB benefits.
The allowance had been increasing in line with CPI from 2018-19, with increases to £1,030,000 for 2018-19, £1,055,000 for 2019-20, and then £1,073,100 for 2020-21.
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The chancellor announced in March 2021 that the allowance would remain at £1,073,100 until April 2026. This freeze will likely see more exceed their LTA and is unfortunate timing for those approaching age 75 in the next few years.
Joshua Croft is a technical consultant at AJ Bell
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