These case studies are for financial advisers only. They must not be distributed to, or relied on by, customers. They are based on our understanding of legislation as at 15 May 2026.
You can read about the transitional regulations and the standard transitional calculation in the transitional arrangements page of this guide.
These case studies look at the consequences of applying for a transitional tax-free amount certificate (TTFAC) in various scenarios.
Case studies
Less than 25% PCLS taken pre-6 April 2024
Neil has the following pensions:
- Defined Benefits scheme that he fully crystallised in October 2020. The scheme pension used 32% of his LTA and he took zero tax-free cash.
- SIPP from which Neil crystallised £600,000 with 25% tax-free cash in January 2024
- £200,000 remaining in the above-mentioned SIPP, which remains uncrystallised
In May 2026, Neil decides to crystallise the remaining £200,000 in his SIPP.
Using the standard transitional calculation (STC) to find the lifetime allowance previously used amount, Neil’s LSA would be limited to £32,427 (remember that the BCEs are calculated as if they were taken immediately before 6 April 2024), leaving him with less than 25% tax-free cash available from his remaining uncrystallised SIPP funds.
Calculation:
Defined Benefits plan: £1,073,100 x 32% = £343,392
LSA/LSDBA used = £343,392 x 25% = £85,848
SIPP: £600,000 x 25% = £150,000
LSA remaining (using the standard transitional calculation): £268,275 - (£85,848 + £150,000) = £32,427
LSDBA remaining: £1,073,100 - (£85,848 + £150,000) = £837,252
If Neil applies for a TTFAC, his allowances would be reduced by the actual amounts of tax-free cash taken from his pre-6 April 2024 BCEs:
Remaining LSA: £268,275 - £150,000 = £118,275
Remaining LSDBA: £1,073,100 - £150,000 = £923,100
This means that if Neil does apply for the TTFAC, he would still be able to access 25% of his remaining £200,000 uncrystallised SIPP fund and have £68,275 LSA left after he does.
More than 25% PCLS taken pre-6 April 2024
Hannah took benefits from an occupational pension scheme in October 2023 of £500,000. This included a protected tax-free cash figure of £250,000, and she moved the rest of the funds to drawdown. She would now like to take benefits from a SIPP valued at £200,000, maximising her tax-free cash.
If she uses the STC, her remaining allowances will be calculated like this:
LSA used: £500,000 x 25% = £125,000
LSA remaining: £268,275 - £125,000 = £143,275
LSDBA remaining: £1,073,100 - £125,000 = £948,100
Using the TTFAC calculation, the allowances would be:
LSA remaining: £268,275 - £250,000 = £18,275
LSDBA remaining: £1,073,100 - £250,000 = £823,100
Hannah’s LSA and LSDBA would be lower with a TTFAC than if she used the STC. If she applied for the TTFAC she wouldn’t be able to take the maximum 25% tax-free cash of £50,000 from her remaining SIPP, so it would not be a good idea for her to apply for the TTFAC in this case.
Overseas Transfer
Alfons made a transfer to a Qualifying Recognised Overseas Pension Scheme (QROPS) in May 2013 of £800,000 and had no other BCEs before 6 April 2024. He now wants to crystallise his remaining UK pension fund of £300,000.
If he uses the STC, the calculation will automatically deduct 25% of the value of the BCE that occurred when he made the transfer overseas from his allowances:
LTA used on transfer to QROPS: £800,000 / £1,500,000 (LTA in 2013/14) = 53.33%
LSA/LSDBA used: £1,073,100 x 53.33% = £572,284.23 x 25% = £143,071.05
LSA remaining: £268,275 - £143,071.05 = £125,203.95
LSDBA remaining: £1,073,100 - £143,071.05 = £930,028.95
In reality, no tax-free lump sums were paid to Alfons when his overseas transfer was made so if he applies for a TTFAC, he will retain his full LSA and LSDBA with no deductions made.
25% PCLS taken where the LTA was lower than £1,073,100
Elaine has a SIPP from which she accessed partial benefits of £500,000 including 25% tax-free cash in March 2017. She would now like to crystallise the remaining funds and wants to know if applying for a TTFAC would increase her LSA and LSDBA.
Lifetime allowance used at the point of crystallisation is £500,000 / £1,000,000 (the LTA was £1m until 5 April 2018) = 50%
Standard Transitional Calculation is £1,073,100 x 50% = £536,550 x 25% = £134,137.50 to be deducted from allowances
LSA on 6 April 2024 is £268,275 – £134,137.50 = £134,137.50
LSDBA on 6 April 2024 is £1,073,100 - £134,137.50 = £938,962.50
If Elaine applies for a TTFAC, the actual amount of tax-free cash taken will be used to reduce her allowances so the calculation would be:
£268,275 - £125,000 = £143,275 LSA remaining
£1,073,100 - £125,000 = £948,100 LSDBA remaining
If Elaine applies for the TTFAC, her allowances will be higher than if she uses the STC to calculate the impact of the pre-6 April 2024 BCEs.
This situation will only occur for someone who has a BCE in years 2016/17 to 2019/20 where the LTA was lower than the LTA used in the STC.
25% PCLS taken where the LTA was higher than £1,073,100
Andrew took benefits from his workplace personal pension scheme in November 2011 of £300,000, including the maximum tax-free cash amount of £75,000. He now wants to work out what his allowances would be using the STC, and if he applied for a TTFAC.
Using the STC, the calculation is done as if the BCE occurred immediately before 6 April 2024, using the LTA at that time, which was £1,073,100 and the calculation looks like this:
£300,000 / £1,800,000 = 16.67% of LTA used at the point of crystallisation
£1,073,000 x 16.67% = £178,885.77 x 25% = £44,721.44 to be deducted from allowances
LSA on 6 April 2024 is £268,275 - £44,721.44 = £223,553.56
LSDBA on 6 April is £1,073,100 - £44,721.44 = £1,028,378.56
If Andrew applies for a TTFAC, his allowances would be calculated like this, using the actual monetary amount of tax-free cash taken at the time:
LSA on 6 April 2024 - £268,275 - £75,000 = £193,275
LSDBA on 6 April 2024 - £1,073,100 - £75,000 = £998,100
As the Lifetime Allowance was higher when Andrew took his benefits than immediately before 6 April 2024, applying for a TTFAC would mean the actual tax-free cash amount taken is used in his calculations so this isn’t a good idea for Andrew.
Situations where someone can’t apply for a TTFAC
- If they only have pre-commencement pensions and no BCEs between 6 April 2006 and 5 April 2024
- If they have already had an RBCE from 6 April 2024 as TTFAC applications must be made before any RBCEs are taken
- If they have enhanced protection with registered tax-free cash of more than £375,000