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Helping you through Fixed and Individual Protection

Legislative changes introduced on 6 April have seen a further, significant reduction to the Lifetime Allowance from £1.25 million to £1 million and the introduction of two new transactional protections (FP2016 and IP2016). 

Applications for these new protections will be through an HMRC digital service but this is not due to launch until July 2016, creating a timing conflict for those who wish to take their benefits before then. 

There are a number of additional steps that need to be followed during this transitional period, and here we outline what needs to be done if you are planning to take benefits before July 2016, as well as offering some simple guidelines on applying for IP2014. It is worth remembering that only the individual can apply for protection, although advisers can offer invaluable help through the process. 

We look at some frequently asked questions:

  1. I want to take my benefits before July 2016, what do I need to do now?
  2. The official form isn’t yet available, how do I manage the interim application process?
  3. Can you help me with applying for a temporary reference number?

How does the Interim Application Process for FP2016 and IP2016 work? 

If you are planning on taking benefits between 6 April 2016 and July 2016, (when HMRC’s online digital process should become available), you can apply for FP2016 or IP2016 using the interim application process. 

To help you with this, HMRC has produced pro forma letter text for applying for both FP2016 and IP2016. 

You can reproduce this text, add in other relevant details and send your letter to: Pension Schemes Services Fitzroy House, Castle Meadow Road, Nottingham, NG2 1BD 

As part of the application process, you must provide certain values or make declarations relating to your pension savings as at 5 April 2016. 

If you are not planning to take benefits between 6 April 2016 and July 2016, you should wait and apply for protection using the online digital service. This is because everyone who protects their pension savings temporarily must also make a full online application from July 2016, and receive a permanent reference number, to ensure their pension savings continue to be protected from an LTA tax charge. 

Temporary reference numbers provided through the interim application process will be in the following format;

  • For FP2016 this will be ‘AJ’ followed by 4 digits – for example, AJ1234; and
  • For IP2016 this will be 4 digits followed by ‘AJ’ – for example, 1234AJ.

The reference numbers provided by the online application process will be very different from the temporary reference numbers provided through the interim process. This makes it easy for HMRC, scheme administrators and members to identify whether protection is temporary, and needs to be followed up with an online application from July 2016 onwards, as the temporary reference numbers expire at the end of July. 

You can still apply for IP2014

Up to 5 April 2017, you can still apply to HMRC for IP2014, by using the online form that HMRC provide. Although the online system for applying for FP2016 or IP2016 goes live in July 2016, if you want to apply for IP2014 before 6 April 2017, you will still have to use the current online form. 

Applying for IP2014 helps to protect pension savings, built up before 6 April 2014, from an LTA excess tax charge, (subject to an overall maximum of £1.5 million). To be eligible for IP2014, the total value of your pension savings, as at 5 April 2014, must be between £1.25 million and £1.5 million. 

The exact amount of your protected LTA is then based on the total value of your pension savings, as at 5 April 2014. HMRC also offer an online tool to help individuals decide whether to apply for IP2014, which can be found at Lifetime Allowance Checking Tool. 

To gain a thorough understanding of all aspects of these new transactional protections you can also read our comprehensive briefing note:  Download the full version of our protection briefing note.


James Jones-Tinsley
Barnett Waddingham LLP


[This is a sponsored article by Barnett Waddingham LL}

Author: Andy Leggett
Posted: Monday, May 16, 2016 | 2:10:08 PM

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