There are a couple of notes to add here. Firstly, the £7,500 figure only applies for events taking place since April 6 2015. Before then, it was 1 per cent of the standard lifetime allowance at the time. It is also worth noting that this condition looks at all PCLS taken in the previous 12 months.
4. The cumulative amount of the additional contributions is more than 30 per cent of the PCLS.
Along with the requirement for the additional contributions to be worth more than 30 per cent of the contributions that could otherwise have been expected, the additional contributions also need to be worth more than 30 per cent of the PCLS.
Where the rules refer to the ‘cumulative amount’, this is a measure to help ensure people cannot avoid the recycling rules simply by spreading their additional contributions over a period of time. The time period looked at is the tax year in question, the two preceding tax years, and the two following tax years.
While PCLS recycling is not a frequent occurrence, the high unauthorised payment charges make it well worth watching out for any planning that might be caught by the rules.
There are many great ways to recycle, but this is definitely one to avoid.
Jessica List is pension technical manager at Curtis Banks
