Lifetime allowance abolished: the lump sum allowance explained

The pension lifetime allowance was abolished on 6 April 2024; the lump sum allowance and lump sum and death benefit allowance now apply instead.

Pension Wise, free, impartial and government-backed guidance from MoneyHelper, can talk through how a pension is taken. Old protections, earlier lump sums and a pot that is still growing can make your own position hard to read. Put your details into the call-back form, at no cost, and an FCA-authorised adviser will look at those pieces side by side over one phone conversation.

What was the pension lifetime allowance?

The government's own tax note says it was introduced as a limit on tax-favoured pension saving:

The LTA was introduced in 2006 as a mechanism for limiting tax-favoured pension savings in registered pension schemes.

— GOV.UK, Abolition of the Lifetime Allowance (LTA), accessed 21 October 2026

The note describes it as "the maximum amount of tax-relievable pension savings an individual can benefit from over the course of their lifetime." Savings could go over the limit, but the excess was charged: "Individuals could contribute to their pension over this limit, but they were subject to a tax charge on any amounts above the allowance." The original limit was £1.5 million; it was later raised to £1.8 million and then reduced step by step to £1,073,100. That was where it stood at the end: GOV.UK's table of past rates gives £1,073,100 as the standard lifetime allowance for 2023 to 2024, the last tax year before it was abolished.

It was one personal limit, not one per pension: a SIPP, a workplace pot and a final salary scheme were all measured against the same LTA. No new lifetime allowance test applies today. What still matters, for anyone who took benefits before April 2024, is how much of the old allowance they used, because that feeds the transitional rules explained below.

Is the lifetime allowance abolished?

Yes. GOV.UK's rates page says: "The standard lifetime allowance was abolished from 6 April 2024." HMRC's Pensions Tax Manual says the same in its own words: "As of 6 April 2024 there is no longer lifetime allowance."

It happened in two steps. At Spring Budget 2023 the government announced that it would abolish the allowance, and Finance (No. 2) Act 2023 legislated so that individuals would not become liable to a new lifetime allowance charge from 6 April 2023 onwards. A second measure, which the note says "completes the work to abolish the LTA", took effect from 6 April 2024; HMRC's manual cites Schedule 9 to Finance Act 2024 for the transitional rules that came with it. The stated policy objective is that the change "supports the government’s efforts to encourage inactive individuals to return to work, in particular those aged 50 and above, by delivering on the commitment to abolish the LTA."

Abolition did not remove every pension limit. The annual allowance on what can be paid in each year is a separate rule, covered in the pension annual allowance guide. What changed is the lifetime cap, and what took its place for lump sums is below.

What replaced the lifetime allowance?

Two lump sum limits did, both set out in GOV.UK's guide to private pension tax. The lump sum allowance, £268,275, is the most you can take as tax-free cash. The larger lump sum and death benefit allowance, £1,073,100, is a ceiling that you or your beneficiaries may be able to use in certain circumstances.

HMRC's rates page lists each for the tax years 2024 to 2025, 2025 to 2026 and 2026 to 2027, and the amount is the same in all three: £268,275 for the standard individual lump sum allowance and £1,073,100 for the standard individual lump sum and death benefit allowance. Some people have more, as the protections section below shows.

The two overlap. Ordinary tax-free cash uses up both at once; payments on serious ill health, and certain lump sums paid out on death, are measured only against the larger figure. Each has its own page here: how the tax-free lump sum works, the lump sum and death benefit allowance and how a defined benefit lump sum uses the allowance.

If you go over, Income Tax is due on the extra amount. To see where you stand, ask your pension provider how much you have used of each allowance, and add up what you have used in all the schemes you belong to. Lump sums from two pensions covers that.

Do the old protections still matter?

Yes, for people who hold one. HMRC's manual says that from 6 April 2024 a person with valid protections has both of their allowances protected, and that protections lift the available lump sum allowance above £268,275 and the lump sum and death benefit allowance above £1,073,100. GOV.UK's guide says the same protection from April 2016 carries across to both new allowances.

The protections HMRC's manual lists, with the pension savings each was open to:

Fixed protection 2012 is listed too, open to those with more than £1.5 million on 5 April 2012. The manual also says that "Prior to 6 April 2024 individuals could apply for certain protections", so these describe who was eligible, not a route open to everyone now.

Primary protection and both individual protections cannot be given up and can only be reduced or lost through pension sharing on divorce. Enhanced protection cannot be lost by someone who applied and was issued a valid certificate before 15 March 2023. GOV.UK says the enhanced and fixed protections come with conditions, and that anyone who stops meeting them may lose the protection and must tell HMRC in writing.

Using a protection takes paperwork. To rely on one, a member quotes HMRC's reference number to the scheme administrator. For the older protections that number is on an HMRC certificate, which the administrator may ask to see; fixed and individual protection 2016 holders have only the number. If you are unsure how much higher your own figure would be, leave your details and an adviser will explain it free of charge.

What is a transitional tax-free amount certificate?

It is a certificate from a pension scheme or annuity provider that records how much tax-free cash a person had already taken before the lifetime allowance went. HMRC's manual says someone who "holds complete and accurate records for all the tax-free benefits they received prior to 6 April 2024, and can show that less than 25% of the benefits they took before that date were taken as tax-free lump sums" may apply for one, and that it confirms both a lump sum transitional tax-free amount and a lump sum and death benefit transitional tax-free amount. The certificate is then used to work out the two allowances.

Without a certificate, the starting position is a standard calculation. For someone who had used up some of the old allowance, the manual says it is done "by deducting 25% of the individual’s lifetime allowance previously-used amount from the lump sum allowance." If that deduction leaves nothing, the allowance is nil. With a certificate, the transitional tax-free amount on it is deducted instead, so the certificate is aimed at someone who took less as tax-free lump sums than the standard calculation assumes and has complete evidence of it.

The conditions are strict:

• The application goes to a certification administrator, which is a scheme administrator or an insurance company that secures a scheme pension or lifetime annuity.
• A certificate must be issued before the person becomes entitled to a relevant lump sum, so timing matters.
• The scheme must either issue the certificate or refuse within three months of receiving the application, and insufficient evidence is the only ground for refusal.
• A certificate cannot be relied on if it is inaccurate, and the allowances are then recalculated, which can leave extra income tax to pay.

Whether the evidence is enough is for the certification administrator to decide, case by case.

Do defined benefit, SIPP and small pensions count?

None of them is tested against a lifetime allowance any more, since that limit no longer exists. What they can do is use the lump sum allowance when a lump sum is taken. GOV.UK says you can usually take up to 25% of "any pension" tax free, and the amounts used count across all your schemes, so a SIPP, a workplace pension and a final salary scheme draw on one allowance: £268,275 for most people, unless a protection or the transitional rules change it.

A final salary or other defined benefit scheme has its own wrinkle, because the lump sum is worked out by formula rather than from a pot; that is in the defined benefit lump sum allowance guide, with the background in what a final salary pension is. For SIPPs see the SIPP guide. Small pots are covered in how small pot pensions are taxed.

Questions about the lifetime allowance

How do I calculate my pension lifetime allowance now?

There is no allowance left to calculate, but if you took benefits before 6 April 2024 the share of the old allowance you used still reduces your lump sum allowance, as the certificate section above explains. For the current figures, GOV.UK suggests asking your pension provider how much of each lump sum allowance you have used.

Was the lifetime allowance charge removed before the allowance itself?

Yes. Under Finance (No. 2) Act 2023 no new lifetime allowance charge could arise from 6 April 2023, a year before the allowance itself was abolished on 6 April 2024.

Is there a different lump sum allowance for young people?

The standard £268,275 applies to individuals in general, with a higher figure for someone holding a protection. GOV.UK's guide covers people with a right to take benefits before 50: their allowances can be cut where all three apply, namely a qualifying career (its examples are professional sports, dance and modelling), scheme membership from before 2006 and a lump sum taken before 55, though never in a uniformed services scheme such as the armed forces, police or fire. If that early-retirement rule might touch your scheme, fill in the form here and an adviser will walk you through it without charge.

Can I still apply for a protection?

HMRC's manual says individuals could apply for certain protections before 6 April 2024. GOV.UK describes a route for some members of public service pension schemes between 1 April 2015 and 31 March 2022, who may be eligible to apply for fixed protection 2016 or individual protection 2016 after the public service pensions remedy; you apply by writing to HMRC.

What happens if I take more than my allowance?

The extra is taxed. GOV.UK says you will pay Income Tax on the amount above your allowances, and the pension provider takes the charge off before you are paid. The tax-free lump sum guide explains how the rest is taxed.

Does the lump sum allowance apply to money that is paid on death?

Certain lump sum death benefits count towards the lump sum and death benefit allowance, according to GOV.UK. The pension death benefits guide covers how those payments work.

Your next step

The lifetime allowance is gone, but your position under the lump sum allowances can still depend on a protection, a transitional certificate and what you have already taken. Whenever you are ready, the call-back form here sends your details on and an FCA-authorised adviser phones to look at your allowances, with no charge. Tax and allowances are covered across the pension tax guides.