Divorce Pre April 2006
The acquiring of a pension credit is deemed to occur on the effective date of the pension sharing order, known as the ‘transfer day’. Where the pension credit was effected before 6 April 2006, the enhancement to the lifetime allowance is calculated using the following formula:
IAPC – is the amount of the pension credit awarded increased by the percentage increase in the RPI from the month in which the rights were acquired to April 2006.
SLA – is the standard lifetime allowance for the tax year 2006/07, i.e. £1.5 million.
EG – Gillian divorced in 2003 and was awarded £137,500 of pension credit from her ex-husband. On 6th April 2006 her pension credit was valued at £150,000 after applying the increase in PRI since 2003 to 2006. As a result of the pension credit the LTA for Gillian will be enhanced by:
