Answers · UK 2025/26

Is there now a limit on how much tax-free cash I can take from my pensions?

Yes. Since the lifetime allowance was abolished, total tax-free cash across all your pensions is capped by the Lump Sum Allowance of £268,275. You normally take 25% of each pot tax-free, but only up to that overall ceiling unless you hold valid HMRC protection from before.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

Full answer

The lifetime allowance was abolished from 6 April 2024, but it was replaced by new lump sum limits. The key one is the Lump Sum Allowance (LSA) of £268,275, which caps the total tax-free cash you can take across all your pensions in your lifetime, equal to 25% of the old £1,073,100 lifetime allowance. There is also a higher Lump Sum and Death Benefit Allowance covering certain lump sums on death or serious ill health. Worked example: you have £400,000 of pension savings. You can normally take 25% (£100,000) tax-free, well within the £268,275 LSA, so the whole 25% is tax-free. But someone with £1.4 million of pensions could not take 25% (£350,000) all tax-free; their tax-free cash is capped at £268,275, and the rest must be drawn as taxable income. If you registered for protections such as Fixed or Individual Protection before the rules changed, your personal allowance figure may be higher, so check before drawing benefits. Most people with pots under about £1 million are unaffected and still simply take 25% tax-free. Use the pension calculator to see your projected tax-free cash. For the current allowances see gov.uk at https://www.gov.uk/tax-on-your-private-pension/lump-sum-allowance.