Lifetime Allowance
The limit (abolished April 2024, was £1,073,100) on the total value of pension benefits that could be accumulated tax-advantaged. Excess amounts attracted a charge of 25-55%.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
The lifetime allowance was, until its abolition, the ceiling on the total value of tax-relieved pension savings an individual could build up across their registered pension schemes before an additional tax charge applied. HMRC guidance confirms the allowance 'stays at £1,073,100 for 2021 to 2022', reflecting the figure it had reached after a series of statutory increases and freezes since it was first introduced by the Finance Act 2004.
Individuals who had built up especially large pension savings before reductions to the standard allowance could apply for one of several forms of 'protection' — fixed protection or individual protection, obtained at different points as the allowance was cut — which preserved a higher personal lifetime allowance or protected the value already accrued. HMRC's guidance on protecting the lifetime allowance sets out how members check and, where relevant, amend their protection status and lifetime allowance protection reference number.
The lifetime allowance regime came to an end when, as HMRC confirms, 'the lifetime allowance was abolished with effect from 6 April 2024'. The abolition, enacted through the Finance Act 2023 and Finance Act 2024, removed the lifetime allowance charge and replaced the old regime with new, separate lump-sum allowances, marking one of the most significant changes to UK pension taxation in a generation.
Example
A member of a defined benefit scheme whose pension savings were valued at £1.2 million in 2021, before the allowance was abolished, would have exceeded the then-£1,073,100 standard lifetime allowance and faced a lifetime allowance charge on the excess unless they held a valid protection.
Related terms
Official sources
This explanation is drawn from the official sources below; every substantive statement is verified against them. For advice on a specific matter, see our find help page.