The lifetime allowance is fixed for each tax year and has, in the past at least increased over a period of years. The amount available at any benefit crystallisation event (‘BCE’) is the amount fixed for the year in which the event occurs and therefore rules are required to cater for situations where BCEs arise in different years with different lifetime allowances. The following rules dictate how the lifetime allowance is to be set against the amount crystallising on a BCE.
If no BCE has occurred in relation to an individual before the current event, the whole of the standard lifetime allowance for that tax year is available (FA 2004, s. 219(2)).
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