What is the lifetime allowance?

The lifetime allowance was a limit on how much you can build up in pensions in total over your lifetime before paying an extra tax charge. This limit was abolished on 6 April 2024.

The lifetime allowance was replaced with the lump sum allowance. This is a limit on how much tax-free cash you can withdraw from all your pensions. The limit is currently set at £268,275.

This means that you'll usually be able to take up to 25% of your pension tax-free up to a maximum of £268,275. The rest is taxed as income.

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