Answers · UK 2025/26
What replaced the UK Pension Lifetime Allowance?
The £1,073,100 Lifetime Allowance was abolished on 6 April 2024. It was replaced by two new allowances: Lump Sum Allowance (LSA) £268,275 capping tax-free cash, and Lump Sum and Death Benefit Allowance (LSDBA) £1,073,100 capping tax-free pension death benefits.
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UK Pension Lifetime Allowance abolished from 6 April 2024 by the Conservative Spring Budget 2023 announcement, confirmed under Labour's Autumn 2024 Budget. Two new allowances replaced it. (1) Lump Sum Allowance (LSA) — £268,275: caps the total of all tax-free lump sums you can take from pensions during your lifetime. Equivalent to 25% of the old £1,073,100 LTA. Anything above is taxable at your marginal Income Tax rate. (2) Lump Sum and Death Benefit Allowance (LSDBA) — £1,073,100: caps tax-free lump sums paid as death benefits to beneficiaries from pensions where the pension holder died before age 75. Above the LSDBA, beneficiaries pay Income Tax at their marginal rate on the excess. Protections: if you have Fixed Protection 2012/2014/2016 or Enhanced/Primary/Individual Protection from before April 2024, your LSA and LSDBA are based on your higher protected LTA × 25% (LSA) and your protected LTA (LSDBA). Net effect: high-earners with pension pots over £1m can save more tax-efficiently again, but tax-free cash is still capped at £268,275 for most.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.