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Pensions tax relief: applications for ‘fixed protection’

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An application form for use by individuals seeking ‘fixed protection’ of the £1.8 million lifetime allowance for pension savings has been published.

The current lifetime allowance of £1.8 million will be reduced to £1.5 million from 6 April 2012.

‘If you expect your pension savings to be more than the lifetime allowance of £1.5 million when you come to take your pension benefits on or after 6 April 2012 you can use fixed protection to reduce or eliminate liability to the lifetime allowance charge.

‘Having fixed protection will mean that you will have a protected lifetime allowance of £1.8 million. You do not need to already have built up pension savings of more than £1.5 million to apply,’ HMRC said in a guidance note.

However, individuals relying on fixed protection will ‘normally’ need to stop building up pension benefits after 5 April 2012.

The form and the guidance note are available on the HMRC website.