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Technical View

Paperless Protection

Back in March we issued a Technical View special feature on the reduction in the lifetime allowance and the various protections available. Following on from this, HMRC have now launched their online facility, and this Technical View sets out the application process for those who are eligible.
 
So, now that the online service is finally here, how does it work for my clients?
 
Firstly, in order to apply, an individual will need an online account with HMRC. This can be setup relatively easily here by entering full name, email address and a password of the individual’s choosing. They will then be given a user ID for future login. This will also show them any existing protections they may already have in place.
 
If your client is self-employed or uses any of the ‘Government Gateway’ online services, they may already have an account setup and so will not need to go through this process.

What happens if my client has already applied using the interim paper application process?

 
If your client has previously applied under the interim service and received a temporary reference number, they will now need to re-apply using the online service. This must be done by 31 August 2016, when all temporary reference numbers will expire. If they have a temporary reference number and fail to re-apply online for a permanent one, their temporary number will no longer be recognised by HMRC. 
 
For those that used the interim application process and their application was received by HMRC up to 31 July 2016, this will be processed by HMRC and the individual will receive a permanent reference number and not need to re-apply online. Any paper applications that were received by HMRC after 31 July 2016 will not be processed. They will be returned to the individual who will then need to apply online as per the new process.
 
This new online service also replaces the previous IP2014 online application service.  Note that the closing date for IP2014 is 5 April 2017

What information does my client need to obtain before applying?

 
Depending on what type of protection your client is opting for, they will need to provide HMRC with certain information when applying. If they are applying for IP2014 or IP2016, they will need to provide the value of all of their combined pension savings as at either 5 April 2014 (for IP2014) or 5 April 2016 (for IP2016)
 
For FP2016, your client will have had to cease contributions / benefit accrual on or before 5 April 2016.

Where can I find out more?

 
HMRC have issued a guide on applying for protection which can be found here

Alongside this, a guide to protection and valuing pension savings can be found here and individuals can also contact the HMRC Pensions Helpline on 0300 123 1079 if they are having difficulty with any of the above.

If you have any queries on any of the above, feel free to drop us an email at technical@sanlam.co.uk. 

This note is to be used by Financial Advisers only. It is not intended for onward transmission to a private customer and should not be relied upon by any other person. Sanlam accepts no liability for any action taken or not taken by an individual or firm as a result of the contents of this material. The tax treatments and information contained in this document is based on current tax law and HMRC practice as at August 2016 and may be subject to change in the future. Whilst we have made every effort to ensure the accuracy of this material, we cannot accept responsibility for any consequence (financial or otherwise) arising from relying on it. This document is for information purposes only and should not be treated as advice and independent taxation advice should be always sought.
 
Past performance is no guarantee to future performance. The value of investments can fall as well as rise so investors could get back less than they invest.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.