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 9 July 2026.
Our guide page, Protected tax-free cash, sets out the rules and the method for calculating protected tax-free cash (PTFC). These case studies seek to demonstrate some examples of how the numbers are crunched.
The following abbreviations are used in these case studies:
- LSA – lump sum allowance
- LSDBA – lump sum and death benefit allowance
- LTA – lifetime allowance
- PTFC – protected tax-free cash
- TFC – tax-free cash
Case studies
Marcus: PTFC no LTA protections or enhancements, and full LSA and LSDBA allowances
Marcus has no lifetime allowance protections or enhancements but has an entitlement to take PTFC of more than 25% from his SIPP, following a block transfer he made in 2017. The A-Day values relating to the PTFC are:
A-day fund value: £130,000
A-day lump sum rights: £45,000
PTFC calculation
When he comes to take his benefits in 2026, the value of his SIPP is £393,500. The PTFC is calculated as follows:
(A x 1.2) + B
Where A is the value of Marcus’s uncrystallised lump sum rights on 5 April 2006, and
B is the additional lump sum amount (ALSA) which is calculated as:
25% x (current fund value – (fund value on 5/4/2006 x LSDBA/1.5million))
So:
(£45,000 x 1.2) + 25% (£393,500 – (£130,000 x £1,073,100/1,500,000))
£54,000 + 25% (£393,500 - £93,002)
£54,000 + £75,124.50
= £129,124.50
This is equivalent to 32.81% of the total value of his SIPP.
Effect on LSA/LSDBA
Marcus doesn’t need to have any LSA left to take PTFC, but he does need to have enough unused LSDBA left. The amount of LSA and LSDBA used up by payment of his PTFC is:
LSA = 25% of £393,500 = £98,375
LSDBA = the actual amount of PTFC = £129,124.50
As this is the first time Marcus has taken any benefits, the balance of LSA and LSDBA after the PTFC is paid will be:
LSA = £268,275 - £98,375 = £169,900
LSDBA = £1,073,100 - £129,124.50 = £943,975.50.
Margaret: Primary protection no registered TFC
Margaret has primary protection with an enhancement factor of 0.53 but doesn’t have registered tax-free cash protection. She’s looking to take benefits from a pension that has PTFC. Her LSA and LSDBA as at 6 April 2024 are:
LSA: £375,000
LSDBA: £1.8 m + (£1.8m x 0.53) = £2,754,000
PTFC calculation:
Her A-Day values in respect of the PTFC are:
A-Day fund value: £804,500
A-Day lump sum rights: £311,500
The pension with PTFC is now worth £1,750,000
The PTFC is calculated as:
(A x 1.2) + B
Where A is the value of Margaret’s uncrystallised lump sum rights on 5 April 2006, and
B is the additional lump sum amount (ALSA) which is calculated as:
25% x (current fund value – (fund value on 5/4/2006 x LSDBA/1.5million))
So:
(PTFC on 5/4/2006 x 1.2) + 25% (current value – (fund value on 5/4/2006 x 2,754,000/1,500,000))
(£311,500 x 1.2) + 25% (£1,750,000 – (£804,500 x 2,754,000/1,500,000))
£373,800 + 25% (£1,750,000 - £1,477,062)
£373,800 + 25% X £272,938
£373,800 + £68,234.50
= £442,034.50
This is equivalent to 25.25% of the total value of her SIPP.
Effect on LSA/LSDBA
Margaret doesn’t need to have any LSA left to take PTFC, but she does need to have enough unused LSDBA left. The amount of LSA and LSDBA used up by payment of her PTFC is:
LSA = 25% of £1,750,000 = £437,500
LSDBA = the actual amount of PTFC = £442,034.50
She took some benefits (tax-free cash and annuity) in the 2017/18 tax year that used up 20% of the LTA. Using the transitional arrangements to take pre-6/4/2024 BCEs into account, her LSA and LSDBA will be reduced by:
25% x (20% of £1,073,100)) = £53,650
Her remaining LSA and LSDBA after the PTFC is paid will be:
LSA = £375,000 - £53,650 (BCE) - £437,500 (PTFC) = NIL
LSDBA = £2,754,000 - £53,650 (BCE) - £442,034.50 (PTFC) = £2,258,315.50
Ken: Enhanced protection no registered TFC
Ken has enhanced protection but no registered TFC. He has an entitlement to more than 25% TFC under his SIPP which he’s looking to crystallise. He’s not crystallised any benefits since 6 April 2024, so his LSA and LSDBA are:
LSA - £375,000
LSDBA - the value of Ken’s uncrystallised rights on 5 April 2024 which was £2.2m
PTFC calculation
His A-day values in relation to PTFC are:
A-day fund value - £600,000
A-day TFC - £200,000
The current value of his SIPP is £950,000. The maximum PCLS he can take is calculated as:
(A x 1.2) + B
Where A is the value of Ken’s uncrystallised lump sum rights on 5 April 2006, and
B is the additional lump sum amount (ALSA) which is calculated as:
25% x (current fund value – (fund value on 5/4/2006 x LSDBA/1.5million))
So:
(PTFC on 5/4/2006 x 1.2) + 25% (current value – (fund value on 5/4/2006 x 2.2m/1.5m))
(200,000 x 1.2) + 25% (£950,000 – (£950,000 - £600,000 x £2.2m/1.5m))
£240,000 + 25% (£950,000 – £880,000)
£240,000 + 25% of £70,000
= £257,500
This is equivalent to 27.1% of Ken’s SIPP value.
Effect on LSA/LSDBA
Ken doesn’t need to have any LSA left to take PTFC, but he does need to have enough unused LSDBA left. The amount of LSA and LSDBA used up by payment of his PTFC is:
LSA = 25% of £950,000 = £237,500
LSDBA = the actual amount of PTFC = £257,500
The balance of LSA and LSDBA after the PTFC is paid will be:
LSA = £375,000 - £237,500 = £137,500
LSDBA = £2,200,000 - £257,500 = £1,942,500.
Maureen: Fixed Protection 2014
Maureen has Fixed protection 2014. She did a block transfer to protect her entitlement to PCLS of more than 25% from her old occupational money purchase pension scheme when she was consolidating her pensions into a SIPP in 2020. She had a defined benefits (DB) pension scheme as well as the SIPP and she took those benefits in May 2025. She has no other pension arrangements. The amount of LSA and LSDBA used up by the DB tax-free cash was £150,000. Fixed protection increases the starting level of her allowances to:
LSA - £375,000
LSDBA - £1.5 million
PTFC calculation
The information about her PTFC is:
A-day fund value: £300,000
A-day TFC: £185,000
When she comes to take her benefits in 2026, the value of her SIPP is £375,000. The maximum PCLS she can take is calculated as:
(A x 1.2) + B
Where A is the value of Maureen ‘s uncrystallised lump sum rights on 5 April 2006, and
B is the additional lump sum amount (ALSA) which is calculated as:
25% x (current fund value – (fund value on 5/4/2006 x LSDBA/1.5million))
So:
(PTFC on 5/4/2006 x 1.2) + 25% (current value – (fund value on 5/4/2006 x 1.5m/1.5m))
(£185,000 x 1.2) + 25% (£375,000 – £300,000)
£222,000 + 25% (£375,000 - £300,000)
£222,000 + £18,750
= £240,750
Effect on LSA/LSDBA
Maureen’s remaining allowances before this RBCE are:
LSA: £375,000 - £150,000 (RBCE in May 2025) = £225,000
LSDBA: £1,500,000 - £150,000 (RBCE in May 2025) = £1,350,000
Maureen doesn’t need to have any LSA left to take PTFC, but she does need to have enough unused LSDBA left. The amount of LSA and LSDBA used up by payment of her PTFC is:
LSA = 25% of £375,000 = £93,750
LSDBA = the actual amount of PTFC = £129,124.50
The balance of LSA and LSDBA after the PTFC is paid will be:
LSA = £375,000 - £150,000 (TFC from DB scheme) - £93,750 (PTFC payment) = £131,250
LSDBA = £1,500,000 - £150,000 (TFC from DB scheme) - £240,750 (PTFC payment) = £1,109,250.
Martin: individual protection 2016
Martin has individual protection 2016 and an entitlement to PTFC under his SIPP. He doesn’t have any other enhancement factors. The total value of his pension rights as at 5 April 2016 was £1,200,000.
He crystallised some benefits in November 2025 and used up £150,000 of LSA and LSDBA with a payment of PCLS.
He’s now looking to take his PTFC from his SIPP. His LSA and LSDBA as at 6 April 2024 were:
LSA = 25% of Martin’s ‘relevant amount’. The relevant amount is the value of his rights as at 5 April 2016 i.e. 25% of £1.2m = £300,000
LSDBA = Martin’s relevant amount i.e. £1.2m
PTFC calculation
A-day values for PTFC:
A-day fund value: £180,000
A-day PCLS: £70,000
The current value of his SIPP is £340,000. The maximum PCLS he can take is calculated as:
(A x 1.2) + B
Where A is the value of Martin’s uncrystallised lump sum rights on 5 April 2006, and
B is the additional lump sum amount (ALSA) which is calculated as:
25% x (current fund value – (fund value on 5/4/2006 x LSDBA/1.5million))
So:
(PTFC on 5/4/2006 x 1.2) + 25% (current value – (fund value on 5/4/2006 x 1.2m/1.5m))
(£70,000 x 1.2) + 25% (£340,000 – (£180,000 x 1.2m/1.5m))
£84,000 + 25% (£340,000 - £144,000)
£84,000 + £49,000
= £133,000
This is equivalent to 39.11% of Martin’s SIPP value.
Effect on LSA/LSDBA
Martin doesn’t need to have any LSA left to take PTFC, but he does need to have enough unused LSDBA left. The amount of LSA and LSDBA used up by payment of his PTFC is:
LSA = 25% of £340,000 = £85,000
LSDBA = the actual amount of PTFC = £133,000
The balance of LSA and LSDBA after the PTFC is paid will be:
LSA = £300,000 - £150,000 (RBCE) - £85,000 (PTFC) = £65,000
LSDBA = £1,200,000 - £150,000 (RBCE) - £133,000 (PTFC) = £917,000