Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Lifetime allowance definition

What does Lifetime allowance mean? In pensions practice, the lifetime allowance is the cap on the total tax‑advantaged pension savings an individual can build up across schemes before extra tax applies. United Kingdom (England & Wales, Scotland, Northern Ireland): The lifetime allowance (LTA) was a statutory limit under the Finance Act 2004. The LTA charge was removed from 6 April 2023 and the LTA itself was abolished from 6 April 2024 (Finance Act 2024). It is replaced by the lump sum allowance (LSA) (generally £268,275), the lump sum and death benefit allowance (LSDBA) (generally £1,073,100), and the overseas transfer allowance (OTA) (generally £1,073,100). Amounts above...

UK pensions tax: lifetime allowance regime pre-6 April 2024 - BCEs, charges, protections, excess lump sums, pension credits on divorce, international enhancements and reporting (Archived)

Published by a LexisNexis Pensions expert

Practice notes

ARCHIVED

This archived Practice Note outlines how the Lifetime allowance regime worked before its abolition on 6 April 2024. It is not maintained. For further details, see Practice Note: Abolition of the lifetime allowance.

The core principle of the pensions tax regime is that members of registered pension schemes receive:

various tax advantages while building up retirement and life assurance benefits; and
certain tax advantages when specific benefits are paid from a registered pension scheme (eg the tax-free pension commencement lump sum)

In return, and to avoid tax charges, a registered pension scheme must comply with a range of restrictions relating to the:

accrual of benefits
payment of contributions; and
payment of benefits

Until 5 April 2024, a key constraint on the build-up of members’ benefits within the pensions tax regime was the lifetime allowance, which limited the amount of benefits that could be saved and taken by, and in respect of, an individual from their registered pension schemes without triggering tax charges. As noted above, with effect from 6 April 2024, the lifetime allowance was abolished. This change was delivered mainly through the Finance Act 2024...

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Wyn Derbyshire

gunnercooke LLP

Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also...

Web page updated on 22/05/2026

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