It is likely to be of interest to those who took less than 25 per cent tax-free cash, or took cash when the LTA was less than £1,073,100.
This could apply to:
- Anyone with a benefits crystallisation event from 6 April 2006 to 5 April 2024
- Anyone who hasn't already had a post 5 April RBCE.
People that should get one include anyone that may have reached 75 before 6 April 2024 with uncrystallised funds, and have not since taken their tax-free cash entitlement, or people who transferred funds to Qrops, or those who have taken pension benefits that contained a disqualifying pension credit.
But relevant clients may have had different pensions at different times, and crystallised benefits from some and not others - so the adviser has to combine everything and work it out.
Trott advised looking at the various tax calculators that are available on the internet to help work it out for the client.
But Trott warned: "Applications only should be made if there is a benefit to a client and it is possible for the TTFAC to be a detriment to the amount available.
"It's the hassle factor versus the tax factor. We all believe that 'pay less tax, money lasts longer' is a vital mantra for advising clients. But there are significant problems if you get the TTFAC wrong, or do not apply for it when you should."
Indeed, FT Adviser has often warned about the potential problems for advisers in getting it wrong.
Yet the biggest fear, Trott said, was the "unknown". She added: "The biggest issue and the most important to the average person is the protected tax free cash rules. It helps them calculate how much cash they can have.
"But who knows what will change after the next election?"
simoney.kyriakou@ft.com
