UK pensions tax: abolition of the lifetime allowance under FA 2024—new lump sum and death benefit allowances, PCELS, overseas transfers, RBCEs, protections, transitional measures, amending regulations and statutory overrides

Published by a LexisNexis Pensions expert

Practice notes

FORTHCOMING CHANGE

HMRC intends to bring in limited technical tweaks in early 2026 to make sure the rules scrapping the lifetime allowance keep working as envisaged. These changes will tidy up provisions, fix minor drafting anomalies and support smoother implementation, taking effect retrospectively from 6 April 2024. While the majority of pension savers will be unaffected, they will resolve targeted issues including: how certain overseas lump sums paid to UK residents are treated; how crystallised rights are valued for trivial commutation lump sums; how scheme-specific and stand-alone lump sums function; and aligning enhancement factors with the position before April 2024. For more detail, see: Implementation of the abolition, below. Up to 5 April 2024, a principal constraint on building up members’ benefits under the pensions tax framework was the lifetime allowance, which limited the level of benefits that could be accumulated and taken by or in respect of an individual from registered pension schemes without triggering tax charges. From 6 April 2024, the lifetime allowance was removed, as set out in the Spring Budget 2023. The aim was to encourage older, inactive people back into employment by eliminating a tax deterrent...

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Web page updated on 22/05/2026

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