The Lifetime Allowance will be frozen for the next five years, Chancellor Rishi Sunak has announced. He made the announcement, as part of the 2021 Spring Budget, on Wednesday 3 March.
The Lifetime Allowance, referred to as the LTA, is the overall maximum amount of pension benefits you can receive before an extra tax charge is added. It will be frozen at £1,073,100 until April 2026.
In his budget speech, The Chancellor said that he would “maintain at their current levels, until April 2026, the inheritance tax thresholds, the pensions LTA and the annual exempt amount in capital gains tax.”
The decision to freeze the LTA goes against expectations that it would rise by £5,300, in line with inflation. It is part of a series of measures to help pay for the Coronavirus support bills, which reports suggest could save the government £80m.
Nigel Peaple, Director of Policy and Advocacy of the Pensions and Lifetime Savings Association (PLSA), has given his views on the 2021 Budget.
He said: “Compared to what it could have been, it’s been a relatively low-impact budget for pensions.” You can watch him give his full reaction to the Budget here.