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Part of the Lump sum allowances guide →
TTFAC: when the certificate recovers £64,620 — and when it costs £35,380
The default assumes maximum tax-free cash was always taken. Evidence it was less and a certificate recovers allowance; evidence it was more and the certificate binds against you.
Based on HMRC’s Pensions Tax Manual (PTM174100, PTM174300, PTM174200) and Finance Act 2024 Schedule 9.
6 min read · Last reviewed
— In short
A Transitional Tax-Free Amount Certificate replaces the standard 25%-of-LTA deduction, which assumes maximum tax-free cash was taken, with evidence of the amounts actually paid. Where the real tax-free cash was lower than the default assumes, typically defined-benefit histories, the certificate recovers allowance; where it was higher, such as a scheme-specific protected lump sum over 25%, the certificate costs allowance. It binds whichever way the evidence falls and cannot be unwound once issued.
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A member who crystallised benefits under the Lifetime Allowance does not start the new regime with a clean £268,275 Lump Sum Allowance. The transitional default deducts 25% of the LTA percentage they used — built on the assumption that every crystallisation took maximum tax-free cash. A Transitional Tax-Free Amount Certificate replaces that assumption with evidence: the scheme-documented tax-free amounts actually paid. The certificate isn't an optimisation lever — it's a substitution of fact for assumption, and it binds whichever way the facts cut.
Case A — the default overstates; the certificate recovers
A member used 80% of the £1,073,100 LTA (£858,480 crystallised), much of it DB scheme pension where little tax-free cash was actually drawn — scheme statements evidence £150,000.
- Default deduction (25% × £858,480)
- £214,620
- LSA remaining on the default
- £53,655
- Evidenced deduction (actual TFC)
- £150,000
- LSA remaining with a TTFAC
- £118,275
- Recovered by the certificate
- £64,620
DB members are the classic winners: scheme pension crystallises LTA without proportionate tax-free cash, so the 25% assumption overstates what was taken.
PTM174100 / PTM174300 — figures engine-computed against the 2026/27 config
Case B — same history, opposite answer
Now suppose the evidence shows £250,000 of tax-free cash — a scheme-specific protected PCLS that paid morethan 25%. The evidenced deduction (£250,000) exceeds the default (£214,620): remaining LSA falls from £53,655 to £18,275. A certificate here costs £35,380 of allowance — and once issued it can't be unwound in favour of the default. Our engine's recommendation on these facts is to stay on the default; the TTFAC calculator runs both paths side by side before anyone applies.
The common errors
Three recur. The first is applying without working both paths — the scheme-specific-PCLS reversal above. The second is missing the lock-in: the application has to be made before the first post-April-2024 relevant crystallisation, after which the default is permanent. Run the comparison at the start of advice, not the end. The third is forgetting the LSDBA side: the certificate substitutes evidence for both allowances at once, and pre-75 serious ill-health and death-benefit events carry a 100% default, not 25% — a history containing one changes the LSDBA arithmetic dramatically.
PTM174300 (lock-in, evidence) · PTM174200 (LSDBA defaults)
Sources & grounding
Worked case A (LTA used 80% = £858,480 → default deduction £214,620 → remaining £53,655; evidenced TFC £150,000 → remaining £118,275; uplift £64,620): computed through the production calculateTTFAC engine against the 2026/27 config.
Worked case B (same history, evidenced TFC £250,000 → remaining £18,275; uplift −£35,380; engine recommendation use_default): computed through the production engine (scripts/ground-phase-c.mts, 2026-06-10).
Lock-in (apply before the first post-April-2024 RBCE) + evidence requirements: PTM174300. Standard 25%-of-LTA-used deduction: PTM174100. LSDBA-side defaults incl. 100% for pre-75 SIH/death events: PTM174200.
For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.
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