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Enhanced Lifetime Allowance (International) protection and when it may be used

16 November 2017

Jenny Ryan, paraplanner with Anderson Anderson & Brown Wealth, flags a rare but useful breed of LTA protection and how she was able to use it to save a client £470,000 of future tax.

Lifetime Allowance protection. How often do you have a client that has such concerns?

If you’re anything like me, on a good day perhaps one in 10 or so clients is close to or breaching their LTA.

And when you do come across these high-fliers, we’ve all got the usual bases covered: Fixed, Individual, maybe even the odd Primary or Enhanced protection might come up every now and again.

Most of us have a pretty good grasp of what each of these offers and what its restrictions are.

However, there is another form of LTA protection that is an even rarer breed, the catchily titled “Enhanced Lifetime Allowance (international)”.

Since I relocated to Aberdeen earlier this year, where oil mega-corporates with countless overseas employees are ten to the dozen, this protection that I had no experience of before has become somewhat of a mainstay in my day-to-day working life, and it’s great.

This protection option is available to individuals who have lived and worked overseas at any time since 2006, during which time they or their overseas employer have been making contributions to a UK pension scheme, i.e. they have not been receiving UK tax relief, but their benefits will be subject to the LTA.

It can be applied for up to five years after the end of the tax year in which they returned to the UK, and is applied as an enhancement factor similar to a Primary Protection factor.

One client I came across recently, who has lived and worked abroad for the last 20 or so years, applied for and received an overseas enhancement factor of 0.57.

Added to his already protected LTA of £1.5m, that’s potentially saved him about £470,000 of future tax – not too shabby!

Whilst clients to whom this relief is available might tend to be the exception rather than the rule, this is definitely one worth keeping up your sleeve, as it could be a big money saver for the lucky few!


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