HMRC has announced a deadline extension to the ‘protection’ scheme which can safeguard the amount of tax-free lump sum available from your NHS pension.
The lifetime allowance – which limited tax-free pensions savings – was officially abolished in April 2024. This means there is no longer a tax-charge on overall pensions’ savings in excess of the available lifetime allowance. However, there is still a cap on the ‘maximum pension commencement lump sum’ (or ‘tax-free cash’) available when benefits are drawn for those without ‘protection’ schemes in place. This limit is currently £268,275 (25 per cent of the former lifetime allowance which was £1,073,100).
Protection schemes were introduced by the government whenever the lifetime allowance limit was reduced to give savers a chance to secure a previous higher allowance before the change took place.
It is still possible to apply for Individual Protection 2016. The deadline was originally 5 April 2025 but this has now been extended to 5 April 2027 for those affected by the McCloud remedy.
The official criteria to apply as part of the extension includes having had more than £1m in pension benefits on 5 April 2016 – which may be the case following the recalculation of figures due to the McCloud remedy.
Protection schemes are complicated so please do discuss with your financial adviser if you require any assistance in this area.
Approver Quilter Financial Services Limited. October 2025
