Uncrystallised funds pension lump sum (UFPLS).
This concept was introduced on 6 April 2015 and allows clients to take lump sums directly from uncrystallised funds, as often as they require, without the need to go into drawdown.
What is uncrystallised funds pension lump sum?
Uncrystallised funds pension lump sum (UFPLS) allows individuals to take a lump from uncrystallised funds within their pension scheme, 25% of which is normally tax-free and the balance is assessable income for tax purposes. The lump sum can be taken in one go or in multiple payments.
How is UFPLS taxed?
For each lump sum taken, 25% will be paid tax-free with the balance taxed at the client’s marginal rate of income tax.
What happens if you trigger the money purchase
annual allowance?
Once the first lump sum is taken, the client will be subject to the reduced money purchase annual allowance of £10,000.
Please note: an uncrystallised funds lump sum cannot be taken where the client has primary protection or enhanced protection and protected lump sum rights as at 5 April 2006 of more than £375,000, or where the uncrystallised funds are from a disqualifying pension credit in relation to a pension sharing order on divorce.