​​​​Pension lump sum allowances (previously Lifetime Allowance)

The Lifetime Allowance (LTA) was a limit on the total value of pension benefits you could build up across all registered pension arrangements without paying extra. The LTA charge was removed from 6 April 2023.

From 6 April 2024, the Government abolished the lifetime allowance and replaced it with new allowances. This page explains what the lifetime allowance was, who it may still affect, and what has replaced it.

​​The allowances that apply from 6 April 2024

Lump Sum Allowance (LSA)

The lump sum allowance (LSA) is the maximum amount of certain tax‑free lump sums you can take from your pension over your lifetime.

The standard lump sum allowance is £268,275.

If you take more than your available LSA, the amount above the limit is usually taxed as income.

Lump Sum and Death Benefit Allowance (LSDBA)

The lump sum and death benefit allowance (LSDBA) is the maximum amount that can be paid as relevant lump sums, including certain death benefits, without a tax charge.

The standard lump sum and death benefit allowance is £1,073,100.

If the total amount paid goes over your available LSDBA, the excess is usually taxed as income at the recipient’s marginal rate.

Why you may still see “Lifetime Allowance (LTA)” wording

Even though the LTA is abolished, it may still appear on:

  • Historic benefit statements and older retirement paperwork
  • Cases where benefits were taken or paid before 6 April 2024
  • Records that were used to work out how much of your new allowances have been used up (transitional rules)

How LTA was calculated (for historic statements and benefits before 6 April 2024)

Some older statements show an LTA “value” and percentage. In a defined benefit scheme, the LTA value was usually calculated as:

Step 1: Multiply the annual pension by 20

Step 2: Add any lump sum entitlement

Step 3: Convert the total into a percentage of the (then) standard LTA

Example (historic illustration using the former standard LTA of £1,073,100):

  • Pension: £60,000 a year
  • Lump sum: £250,000

LTA value = (20 × £60,000) + £250,000

= £1,200,000 + £250,000

= £1,450,000

LTA percentage = (£1,450,000 ÷ £1,073,100) × 100

= 135.12%

When tax could apply (now)

Since 6 April 2024, tax is generally only triggered where certain lump sums exceed the available LSA or LSDBA.

If you have benefits in other pension arrangements, that can affect how much allowance remains available to you.

Further support

If you are a Civil Service employer, specialist pension tax/allowances training is available.

Employer LTA Support