Lifetime Allowance

HM Revenue & Customs (HMRC) require that, on retirement or death, the value of pensions saving should be checked against the level of a Lifetime Allowance (LTA). This is set at £1.03 million from April 2018.

More information can be found in the leaflet Annual Allowance & Lifetime Allowance – Impact of changes from April 2016click here to view and/or print a copy.

The calculation of the value of your pension benefits at retirement must include all pension and cash sum benefits from all tax-registered pension schemes of which you have been a member, including personal and stakeholder pensions and AVC arrangements. However, State benefits and pensions which you receive in respect of anyone else – such as a widow's, widower's or civil partner's pension – do not count towards the LTA.

You can receive total pension benefits up to the value of the LTA without incurring any additional tax when the benefits are paid. The only tax charge will be income tax payable on your pension as it is paid.

For those individuals who have benefits valued at more than the LTA, additional tax will be charged on the value of the excess benefit when they retire.