Employment Tax

Transitional protection

Produced by Tolley in association with John Hayward
  • 18 May 2022 14:31

The following Employment Tax guidance note Produced by Tolley in association with John Hayward provides comprehensive and up to date tax information covering:

  • Transitional protection
  • Introduction
  • The need for transitional protection
  • Primary protection
  • Enhanced protection
  • The lifetime allowance from 6 April 2011
  • Fixed protection
  • The lifetime allowance from 6 April 2014
  • Fixed protection 2014 (FP14)
  • Individual protection 2014 (IP14)
  • More...

Transitional protection


There is a lifetime limit on the total amount of pension value that can benefit from tax relief (see the Lifetime allowance and the lifetime allowance charge guidance note). Testing against the lifetime allowance takes place at a benefit crystallisation event. Generally, a benefit crystallisation event occurs when benefits are taken.

The levels at which the lifetime allowance have been fixed are as follows:

Tax YearAmount

From 6 April 2018, the lifetime allowance has increased annually in line with increases in the Consumer Price Index (CPI). This link between the CPI and the lifetime allowance has been removed with effect from 6 April 2021. The lifetime allowance is frozen at £1,073,100 for the tax years 2021/22 to 2025/26.

The need for transitional protection

At the time of the introduction of the limit, it was recognised that some people would have accrued pension rights that already exceeded the lifetime allowance of £1.5m. It was clear that without extending them, some form of protection would become subject to a lifetime allowance charge once benefits were taken. The result would effectively be the withdrawal of pension benefits that individuals may have been planning for and depending on.

Two forms of protection were initially introduced, namely:

  1. primary protection

  2. enhanced protection

Registration was necessary in order to benefit from one or both forms of protection.

Primary protection

Primary protection was designed for those who, as of 5 April 2006, already had pension rights that exceeded £1.5m. So long as those individuals registered

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Popular Articles

Missing trader intra-community fraud (MTIC)

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s

06 Jun 2022 14:02 | Produced by Tolley Read more Read more

Trading losses carried forward

The reform of corporate losses within Finance (No 2) Act 2017 included a mixture of relaxations to the use of losses within the previous regime which applied before 1 April 2017 and also a major restriction (50% for most companies) on the amount of profits after 1 April 2017 that can be covered by

21 Jun 2022 09:13 | Produced by Tolley Read more Read more

Close companies ― overview

Close companies ― overviewMeaning of close companyThe tax rules for close companies are intended to address those companies that are closely controlled (ie by the owners and their families) and therefore could be used to manipulate the tax position of its activities and its investors. Therefore,

23 Jun 2022 10:25 | Produced by Tolley Read more Read more