Bethany Joslyn: Lifetime allowance charges explained

Pension benefits are tested against the lifetime allowance whenever a benefit crystallisation event (BCE) occurs. If the value of the benefits tested exceeds the member's available lifetime allowance, a tax charge is due on the excess. Often, we are more focused on preventing a lifetime allowance charge than managing one. Where prevention isn't possible or practical, careful planning is invaluable in mitigating the impact the charge has on your client's pension and their overarching goals. Understanding how the charge is calculated and paid is the first step. How is the charge calcula...