Member does not get a PCLS, but 25% of the payment is usually tax free with the rest taxed as income under PAYE

Any UFPLS that isn’t spent when the member dies will be counted as their estate for inheritance tax, unlike any money that is left in the pension which isn’t subject to IHT.

The member can take the entire pension as a UFPLS, a series of UFPLS payments or potentially take some of the pot as a UFPLS and the rest can be used to buy an annuity or go into flexi access drawdown.

For a payment to qualify as a UFPLS:

• it must be paid from uncrystallised (or unused) rights held in a money purchase pension;
• the member must have reached normal minimum pension age
• a member aged below 75 when the payment is made must have an amount of lifetime allowance remaining that is greater than or equal to the amount of the UFPLS they wish to take;
• a member aged 75 or over when the payment is made must have some lifetime allowance remaining.

When can’t a member take a UFPLS:

• When the pension is crystalised
• The member has primary protection and/or enhanced protection where the protection of the lump-sum rights is for more than £375,000;
• The member has scheme specific tax-free cash protection that entitles them to a PCLS of more than 25% of the value of the fund; or
• The member has a lifetime allowance enhancement factor and the available portion of the member’s lump- sum allowance is less than 25% of the proposed
• The member’s pension as scheme specific tax free cash protection