Lifetime allowance
As of 6 April 2024, the UK Lifetime Allowance rules, which cap pension tax savings, have been abolished. There is no longer a limit on how much money you can save in your pension fund without facing additional tax charges.
How did it work previously?
Before 6 April 2023, if the value of your pension benefits when you took them was more than the lifetime allowance, or more than any protections you held, you had to pay tax on the excess benefits. This did not include any state pension, state pension credit or partner’s or dependant’s pension you were entitled to.
The lifetime allowance covered any pension benefits you had in all tax-registered pension arrangements – not just the Local Government Pension Scheme (LGPS).
What’s else is changing?
From 6 April 2024, two new lump sum allowances have been introduced – the lump sum allowance (LSA) and the lump sum and death benefit allowance (LSDBA).
The LSA is set at £268,275 and limits the amount of tax-free cash an individual can take. The LSDBA is set at £1,073,100 and limits the amount of tax-free cash that can be taken by an individual and paid in respect of them when they die.
Further guidance will be added to this page when made available by the LGPS
