Quick answer: The UK Lifetime Allowance (LTA) of £1,073,100 was abolished on 6 April 2024 by the Finance Act 2024. It was replaced by three separate allowances: the Lump Sum Allowance (LSA) of £268,275 (cap on tax-free lump sums in life), the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 (cap on life lump sums plus pre-75 death benefits), and the Overseas Transfer Allowance (OTA) of £1,073,100 (QROPS cap). Holders of valid LTA protections (Primary, Enhanced, Fixed 2012/14/16, Individual 2014/16) keep their higher personal allowances automatically.
Lump Sum Allowance Calculator UK 2026
Your 2026/27 Allowances
What changed on 6 April 2024 — LTA abolition explained
The UK Lifetime Allowance (LTA) was first introduced by the Finance Act 2004 to cap the total tax-relieved pension benefits a person could build up over their lifetime. From its peak of £1.8 million in 2010/11, the LTA was progressively cut to £1 million by 2016/17, then partially indexed to £1,073,100 from 6 April 2020. The chancellor Jeremy Hunt announced in the March 2023 Spring Budget that the LTA charge would be reduced to 0% from April 2023, and the LTA itself fully abolished from 6 April 2024. The abolition was enacted in the Finance Act 2024, supplemented by The Pensions (Abolition of Lifetime Allowance Charge etc.) Regulations 2024.
The reform was driven by NHS doctor early retirement — consultants and GPs were retiring at age 55-60 to avoid LTA charges that could exceed 55% on excess benefits. The Treasury estimated that abolishing the LTA would retain approximately 15,000 senior doctors in the NHS, although critics argued it was a tax break for the wealthiest 1% of pension savers.
The three replacement allowances (LSA, LSDBA, OTA) do not cap total pension wealth — you can now accumulate any sum tax-relieved up to the Annual Allowance limits. They only cap the tax-free portions paid out as lump sums. HMRC’s detailed guidance lives in the Pensions Tax Manual (PTM): see PTM173000 for the full Lump Sum Allowance reference.
The three new allowances at a glance
| Allowance | Cap 2026/27 | What it limits | Excess tax |
|---|---|---|---|
| Lump Sum Allowance (LSA) | £268,275 | Tax-free lump sums in life (PCLS, UFPLS tax-free element, scheme-specific lump sums) | Marginal income tax rate (20/40/45%) |
| Lump Sum & Death Benefit Allowance (LSDBA) | £1,073,100 | Life lump sums PLUS pre-75 death benefits paid within 2 years | Marginal income tax of recipient |
| Overseas Transfer Allowance (OTA) | £1,073,100 | Transfers to QROPS | 25% Overseas Transfer Charge |
The figures are not indexed for 2026/27 — HM Treasury confirmed in the Autumn Statement 2025 that the LSA, LSDBA and OTA will remain frozen until at least 6 April 2028.
Lump Sum Allowance (LSA) deep dive
The LSA is £268,275 — exactly 25% of the abolished LTA of £1,073,100. This is the maximum amount you can take as tax-free cash across all registered pension schemes in your lifetime. It applies to:
- Pension Commencement Lump Sum (PCLS) — the classic ‘25% tax-free cash’ taken alongside an income from drawdown or annuity
- Tax-free element of Uncrystallised Funds Pension Lump Sums (UFPLS) — one-off withdrawals where 25% is tax-free and 75% taxable
- Stand-alone lump sums — certain pre-2006 scheme-specific tax-free lump sums
- Trivial commutation lump sums — rare under modern rules
The LSA is a monetary cap, not a percentage cap. If you have £2 million in pensions and no protection, your tax-free element is still £268,275 (not 25% × £2m = £500,000). The remaining £231,725 of the ‘available’ 25% must either be drawn as taxable income or paid as a Pension Commencement Excess Lump Sum (PCELS) taxed at your marginal rate. For full mechanics see HMRC PTM063210.
Worked example — LSA cap in action
Sarah is 60 and has a £1.5 million SIPP with no LTA protection. She wants the maximum tax-free cash today.
| Total SIPP value | £1,500,000 |
| 25% notional tax-free entitlement | £375,000 |
| LSA cap | £268,275 |
| Actual PCLS Sarah can take tax-free | £268,275 |
| Remaining fund to crystallise into drawdown | £1,231,725 |
| Taxable income drawn at 40% rate (if she takes £100k) | £40,000 tax |
Before April 2024, the LTA charge of 25% (income) or 55% (lump sum) would have applied to her £426,900 LTA excess. Under post-LTA rules, that £426,900 stays in her pension and is taxed at her marginal rate only when drawn as income — a meaningful win for higher-net-worth savers.
How the LSA interacts with multiple schemes
The LSA is a single combined allowance across all your schemes. Each scheme administrator reports your benefit crystallisation events (BCEs) to HMRC, and your remaining LSA decreases. If you took £120,000 PCLS from Scheme A in 2024/25, your remaining LSA going into Scheme B is £268,275 minus £120,000 = £148,275. Before any second BCE, send the receiving administrator a copy of your previous BCE statement.
Lump Sum & Death Benefit Allowance (LSDBA)
The LSDBA is £1,073,100 — identical to the abolished LTA. It is the combined cap on:
- All life-time tax-free lump sums (counts against both LSA and LSDBA)
- Lump sum death benefits paid before age 75, paid within 2 years of notification of death
- Certain serious-ill-health lump sums
Death benefits paid after age 75 are not tested against the LSDBA — they are simply taxed at the beneficiary’s marginal income tax rate (since the 2015 freedoms reform).
Worked example — LSDBA at death before 75
Tom dies at age 73 with a £1.6 million SIPP and no protections. He had previously taken £200,000 PCLS in 2022/23 (before LTA abolition).
| LSDBA available | £1,073,100 |
| Less: 25% of LTA used pre-April-2024 (notional) | £200,000 |
| Remaining LSDBA | £873,100 |
| Lump sum death benefits paid to beneficiaries | £1,600,000 |
| Tax-free portion (capped at remaining LSDBA) | £873,100 |
| Taxable excess (charged to beneficiaries at marginal rate) | £726,900 |
Tom’s spouse Mary inherits the lump sum. If Mary is a 40% taxpayer, the excess tax bill is £290,760 (40% of £726,900). Most beneficiaries opt for inherited drawdown rather than lump sum to spread the tax over many years — explored in detail below.
Inherited drawdown vs lump sum death benefit
For deaths before age 75, beneficiaries who inherit a drawdown plan can withdraw income tax-free for life (no LSDBA test on the drawdown route — only on the lump sum route). This is HMRC’s biggest planning gift to wealthy families. For deaths after 75, both routes are taxed at the beneficiary’s marginal rate. Always ask the scheme administrator about flexi-access nominee/successor drawdown before accepting a lump sum payout. For framework, see PTM072300.
Overseas Transfer Allowance (OTA)
The OTA is £1,073,100. It is the cap on transfers from a UK registered pension scheme to a Qualifying Recognised Overseas Pension Scheme (QROPS) without triggering the Overseas Transfer Charge (OTC) of 25%.
Before 9 March 2017, QROPS transfers were uncapped. The OTC was introduced to deter expat tax avoidance unless the transfer was ‘genuinely’ overseas (e.g. the member lived in the destination country or in the EEA). After Brexit and post-LTA reform, the rules have tightened. Key points:
- The OTA is reduced by previous crystallisation events since 6 April 2024 (i.e. lump sums and BCEs)
- Transfers above the OTA pay the 25% OTC unless an exclusion applies
- Exclusions: member resident in same country as QROPS, EEA-to-EEA transfers (limited), employment-sponsored schemes
- Pre-30 October 2024 transfers had broader exclusions; post-Budget tightening narrowed these
OTC worked example
Lisa lives in Spain and transfers her £1.5 million UK SIPP to a Maltese QROPS in May 2026. She has no prior crystallisations and no LTA protection.
| QROPS transfer value | £1,500,000 |
| OTA available | £1,073,100 |
| Excess subject to OTC | £426,900 |
| OTC payable (25%) | £106,725 |
| Net amount reaching QROPS | £1,393,275 |
The destination country’s tax treatment then governs ongoing benefits. Always seek cross-border pension advice from a firm authorised in both jurisdictions. HMRC QROPS guidance covers the regulatory side.
LTA protections in 2026 — the full list
Six legacy LTA protections automatically convert into higher personal LSA and LSDBA under Schedule 9 of the Finance Act 2024. You do not need to reapply — HMRC keeps your protection on record provided you haven’t lost it through subsequent contributions.
1. Primary Protection (PP)
Applied for between 6 April 2006 and 5 April 2009. Available to people who held pension benefits exceeding £1.5 million at 5 April 2006 (A-Day). PP gives a personal LTA equal to the A-Day value × the standard LTA index. Under post-LTA rules, this converts to a personal LSDBA of 1.5× the protected amount, and a personal LSA of 25% × protected LSDBA.
2. Enhanced Protection (EP)
Applied for between 6 April 2006 and 5 April 2009. Originally provided 100% LTA shelter (no monetary cap), provided no ‘benefit accrual’ after A-Day. From 15 March 2023, the rules were relaxed: EP holders can now make further contributions without losing protection, but their LSA is capped at the value of tax-free cash certified at 5 April 2023 (recorded on the HMRC protection certificate). Most EP holders still enjoy a personal LSA well above £268,275.
3. Fixed Protection 2012 (FP2012)
Applied for by 5 April 2012. Locks in a personal LTA of £1.8 million, converting to a personal LSDBA of £1.8m and a personal LSA of £450,000 (25% of £1.8m). Lost if any benefit accrual occurred after 5 April 2012 (relaxed from 15 March 2023).
4. Fixed Protection 2014 (FP2014)
Applied for by 5 April 2014. Personal LTA £1.5m. Converts to personal LSDBA of £1.5m and LSA of £375,000.
5. Fixed Protection 2016 (FP2016)
Application window: open since 6 April 2016, no deadline. Personal LTA £1.25m. Converts to personal LSDBA of £1.25m and LSA of £312,500. Useful for people whose pension was between £1.073m and £1.25m on 5 April 2016 — even if they have continued accruing, they may have a window to register before HMRC reviews historic accrual.
6. Individual Protection 2014 (IP2014)
Application window closed 5 April 2017. Personal LTA equal to the lower of the pension value at 5 April 2014 and £1.5m. Allows continued contributions without losing protection (key advantage over FP). LSA = 25% of protected LSDBA, up to £375,000 maximum.
7. Individual Protection 2016 (IP2016)
Application window: open since 6 April 2016. Personal LTA equal to the lower of pension value at 5 April 2016 and £1.25m, minimum £1m. LSA up to £312,500. Most relevant protection for the post-2016 generation.
| Protection | Personal LTA | Personal LSA | Personal LSDBA | Further contributions allowed? |
|---|---|---|---|---|
| Primary | 1.5x× index | 25% of protected LSDBA | Index-linked | Yes |
| Enhanced | No cap | Capped at 5/4/23 cert value | No cap | Yes (post-15/3/23) |
| FP2012 | £1.8m | £450,000 | £1.8m | Yes (post-15/3/23) |
| FP2014 | £1.5m | £375,000 | £1.5m | Yes (post-15/3/23) |
| FP2016 | £1.25m | £312,500 | £1.25m | Yes (post-15/3/23) |
| IP2014 | £1m-£1.5m | 25% of protected (max £375k) | Protected amount | Yes (always) |
| IP2016 | £1m-£1.25m | 25% of protected (max £312.5k) | Protected amount | Yes (always) |
Transitional Tax-Free Amount Certificate (TTFAC)
If you crystallised pension benefits before 6 April 2024, your remaining LSA is calculated using a transitional formula:
Standard formula: Remaining LSA = £268,275 − (25% × previous LTA used in £)
For many people, the ‘25% of LTA used’ is greater than the lump sums they actually took. This penalises members who took less than 25% PCLS (or none at all). HMRC’s remedy is the Transitional Tax-Free Amount Certificate (TTFAC):
- Issued by your scheme administrator on request
- Calculates your actual tax-free lump sums taken pre-6/4/24 instead of the standard 25%-of-LTA assumption
- Replaces the standard transitional deduction, potentially restoring tens of thousands of LSA
- Must be obtained before the next benefit crystallisation event
- Once requested, you cannot revert to the standard calculation even if the TTFAC is less favourable
TTFAC worked example
James took a £100,000 PCLS in 2018 from his DB scheme that had a transfer value of £800,000. Under the standard method, his ‘LTA used’ was 74.55%, meaning his remaining LSA is £268,275 − (25% × 74.55% × £1,073,100) = £268,275 − £200,000 = £68,275. With a TTFAC, the actual cash he took was £100,000, so his remaining LSA becomes £268,275 − £100,000 = £168,275 — an additional £100,000 of tax-free headroom.
Pension Commencement Excess Lump Sum (PCELS)
If you want to take more than 25% cash but have exceeded your LSA, the excess can be paid as a Pension Commencement Excess Lump Sum (PCELS). This is a new payment type introduced by the Finance Act 2024.
- Paid alongside a PCLS (i.e. you can’t take a PCELS without also crystallising into a drawdown/annuity)
- Taxed at the member’s marginal income tax rate (0/20/40/45%)
- The scheme deducts the tax under PAYE before paying out the net amount
- Counts towards LSDBA but not towards LSA (since LSA is already exceeded)
For a higher-rate taxpayer wanting an additional £100,000 above their LSA, the PCELS would be £100,000 gross, less £40,000 PAYE = £60,000 net. Compare to taking £100,000 as drawdown income spread over years to use multiple basic-rate bands — usually a better outcome.
The 25% tax-free cash — PCLS rules in 2026
The PCLS rule is unchanged in mechanics: up to 25% of the value of benefits crystallised can be taken tax-free, subject to the LSA cap. Key points to remember in 2026:
- PCLS must be taken at the same time as another benefit (typically drawdown designation or annuity purchase). You cannot take ‘just the tax-free cash’ without also designating the remaining 75%.
- For DB schemes, the PCLS is calculated using scheme-specific commutation factors — not always 25% of the transfer value.
- PCLS must be taken within 12 months of the right to PCLS arising (with limited exceptions).
- UFPLS (uncrystallised funds pension lump sum) provides an alternative: 25% tax-free + 75% taxable in a single withdrawal, with the tax-free element counting against the LSA.
- Small pots rule: up to 3 personal pots of £10,000 or less and unlimited occupational pots of £10,000 or less can be paid as a small-pot lump sum (25% tax-free + 75% taxable) without using LSA.
See the MoneyHelper guide for a member-friendly summary.
Scheme-specific tax-free lump sums (pre-2006 protected)
Some occupational DB schemes provide tax-free lump sums in excess of 25% under pre-2006 protected rights (often known as ‘A-Day’ or ‘scheme-specific’ PCLS). These are still permitted in 2026 under transitional rules in Schedule 36 of the Finance Act 2004, but the formula must be applied carefully:
- The pre-2006 tax-free lump sum is rolled forward by the standard LTA index ratio (£1,073,100 / £1.5m)
- Plus 25% of post-2006 fund growth
- The resulting figure can exceed £268,275 (i.e. the personal LSA is effectively higher than the standard LSA)
- The lump sum is still tested against the personal LSDBA
This route benefits public sector scheme members (e.g. NHS 1995 section, Civil Service Classic) who hold scheme-specific protection. Always ask the scheme administrator for a written PCLS calculation in advance — the figures can be material.
The Pension Schemes Act 2023 — framework legislation
The Pension Schemes Act 2023 (PSA 2023) was the enabling framework for several reforms culminating in the LTA abolition. Although the LTA abolition itself was enacted via the Finance Act 2024 (it is income-tax legislation, not pensions legislation), several PSA 2023 provisions interact with the new allowance regime:
- Pensions dashboards rollout (delayed to 2026 staging)
- Collective Defined Contribution (CDC) scheme authorisation
- The Pension Regulator (TPR) powers expansion
- DB scheme funding code (Fast Track and Bespoke routes)
Read the full PSA 2023 at legislation.gov.uk and the latest TPR guidance at thepensionsregulator.gov.uk.
Inheritance tax interaction — the 2027 changes
HM Treasury announced in the October 2024 Autumn Budget that unused defined contribution pension pots and lump sum death benefits will be brought within the scope of Inheritance Tax (IHT) from 6 April 2027. This is the biggest pension tax change in a decade and overlaps heavily with the LSDBA rules:
- From April 2027, the value of an undrawn DC pot at death will be added to the estate for IHT purposes
- The standard nil-rate band of £325,000 plus residence nil-rate band of £175,000 will apply
- The 40% IHT charge will sit on top of any income tax on beneficiary drawdown income
- Combined effective tax rate could exceed 70% for higher-rate beneficiaries
This dramatically changes pension estate planning. Strategies under consideration: spending pension first (instead of last), gifting under the 7-year rule, life insurance written in trust to cover IHT, and bypass trusts. See gov.uk consultation for technical detail.
How scheme administrators report your LSA usage
Under HMRC’s Real Time Information (RTI) reporting framework, scheme administrators must report each LSA-relevant payment to HMRC within deadlines:
| Event | Reporting deadline | To whom |
|---|---|---|
| Pension Commencement Lump Sum (PCLS) | By 31 January following tax year | HMRC via Event Report |
| Pension Commencement Excess Lump Sum (PCELS) | By 19 May following tax month | HMRC via PAYE RTI |
| UFPLS (tax-free element) | By 19 May following tax month | HMRC via PAYE RTI |
| Lump Sum Death Benefit | By 31 January following tax year | HMRC + beneficiary |
| QROPS transfer | Within 60 days | HMRC Form APSS262 |
Members should keep every BCE statement they receive. If you transfer your pension to a new provider, provide them with copies of all prior BCE statements — otherwise they will assume zero prior LSA usage and may miscalculate your future allowances.
Comparison — pre-April 2024 vs post-April 2024 vs April 2027 (proposed)
| Rule | Pre-April 2024 | Post-April 2024 (now) | April 2027 (proposed) |
|---|---|---|---|
| Total pension cap | LTA £1,073,100 | No cap (only LSA/LSDBA on lump sums) | No cap; IHT on undrawn pots |
| LTA charge on excess income | 25% | Abolished | Abolished |
| LTA charge on excess lump sum | 55% | Abolished; replaced by PCELS at marginal rate | Same as 2024 |
| Tax-free cash cap | 25% of LTA (£268,275) | LSA £268,275 | LSA £268,275 |
| Death benefits pre-75 | Tax-free if within 2 years | Tax-free up to LSDBA | 40% IHT + LSDBA test |
| Death benefits post-75 | Marginal income tax | Marginal income tax | 40% IHT + marginal income tax |
Frequently Asked Questions
Will the LTA come back?
What if I had Enhanced Protection but made contributions in 2024?
Can I still apply for Fixed or Individual Protection 2016 in 2026?
Does the State Pension count towards LSDBA at death?
What is a pension recycling rule?
How does the Annual Allowance interact with the LSA?
Do trivial commutation lump sums count towards LSA?
Can I split my pension across multiple schemes to maximise LSA?
What happens to my LSA if I move abroad?
How does the LSA work with phased drawdown?
Is there a deadline for taking my PCLS after 6 April 2024?
What if my scheme refuses to issue a TTFAC?
How does the LSDBA work for survivor benefits in DB schemes?
About this calculator — methodology & sources
Last updated 25 May 2026 by Mustafa Bilgic. This calculator and guide were prepared by cross-referencing the following authoritative UK sources:
Disclaimer: This calculator provides guidance only based on UK law as at 25 May 2026. It is not personal financial advice. Pension allowance rules are complex and can interact with other tax provisions. For decisions involving sums above £100,000 or involving LTA protection, always consult a qualified Independent Financial Adviser (IFA) regulated by the FCA — ideally Chartered Financial Planner (CFP) or holding the Pension Transfer Specialist (PTS) qualification. Use the FCA Register to verify any adviser’s authorisation.
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