LTA is the tax levied on a person’s total pension value if it exceeds the prevailing Lifetime Allowance (LTA) threshold when it comes into payment.
The threshold for 2019/20 is £1.055M, which typically starts to bite at OF 5 level. The charge (typically 25%) is paid over the lifetime of the individual by way of a reduction in their pension. The reduction is determined by age and health related factors which are released by the Government Actuary’s Department (GAD).
The good news is that these factors were reviewed for those retiring after 1st April 2019 and were improved such that the monthly reductions required to pay a given tax bill are mostly* lower than before. In a further development the previous difference between male and female rates has now been abolished and the rates are the same regardless of gender. Interestingly the GAD rates are still shown as male and female (albeit that the factors are the same) which might mean that the harmonisation is not yet permanent.
Annual reduction in pension to satisfy an LTA tax bill of £10,000.
*These would have been better off under the old rates.
