Post-April 2024 Pension Allowance Calculator
Frequently Asked Questions
Was the pension Lifetime Allowance really abolished?
Yes. The Lifetime Allowance (LTA) of £1,073,100 was abolished from 6 April 2024. The previous LTA charge of 55% (for lump sums) or 25% (for income) no longer applies. However, new lump sum allowances replaced the LTA: the Lump Sum Allowance (£268,275) caps total tax-free cash, and the Lump Sum and Death Benefit Allowance (£1,073,100) limits tax-free lump sums on death.
What is the Lump Sum Allowance (LSA)?
The Lump Sum Allowance is £268,275 for 2024/25. It is the maximum amount of tax-free cash you can receive from your pensions in your lifetime (across all pension types). This includes pension commencement lump sums (PCLS), uncrystallised fund pension lump sums (UFPLS tax-free portions), and trivial commutation lump sums. Any tax-free cash taken above this limit is taxed as income.
What is the Lump Sum and Death Benefit Allowance (LSDBA)?
The LSDBA is £1,073,100. It limits the total of tax-free lump sums (including the LSA amounts above) plus certain lump sums paid on death. If your combined pension wealth paid as lump sums exceeds this, the excess is subject to income tax in the hands of the beneficiary (not a special 55% LTA charge as under the old rules).
Do I need LTA protection after April 2024?
Existing LTA protections (Enhanced, Primary, Fixed, Individual) remain relevant because they increase your Lump Sum Allowance and LSDBA. For example, Enhanced Protection with a lump sum factor may give you a higher LSA than the standard £268,275. You should review your protection documents to determine your personal limits. New applications for LTA protection closed before April 2024.
How is a defined benefit pension valued for the Lifetime Allowance?
For LTA purposes (pre-April 2024) and for tracking against the LSDBA (post-April 2024 death benefits), a DB pension was valued at 20× the annual pension at the point of crystallisation (the benefit crystallisation event). For example, a £30,000/year DB pension = £600,000 of LTA usage. State pension is excluded from all LTA and lump sum allowance calculations.