The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2026

Explanatory note

Reproduced verbatim from the instrument as published on legislation.gov.uk (Crown Copyright, Open Government Licence v3.0). The note is prepared by the responsible government department and is not part of the instrument itself.

These Regulations amend and modify primary and subordinate legislation to make further consequential provision in connection with the removal of the lifetime allowance and the lifetime allowance charge by the Finance (No. 2) Act 2023 (c. 30) and the Finance Act 2024 (c. 3) .

A reference in this Explanatory Note to “FA” followed by a year is a reference to a Finance Act of that year. A reference in this Explanatory Note to “ ITEPA 2003 ” is a reference to the Income Tax (Earnings and Pensions) Act 2003 (c. 1) .

The amendments made by regulations 2(6), 4(2), 12, and 14(4) to (7) of these Regulations have effect in relation to events occurring on or after 29th June 2026. The amendments made by the rest of these Regulations have effect for the tax year 2024-25 and for subsequent tax years.

Paragraph 134(2)(b) of Schedule 9 to FA 2024 allows regulations to be made after 5 April 2024 so as to have effect tax years 2024-25, 2025-26 and subsequent tax years. Regulations made under this paragraph may not be made after 30th June 2026 (paragraph 134(4) of Schedule 9 to FA 2024, as amended by section 59 of FA 2026 (c. 11) ).

Part 2 of these Regulations contains provisions which amend primary legislation.

Regulation 2 amends section 574A of ITEPA 2003 as to relevant lump sums paid from an individual’s overseas pension scheme. It also amends section 637Q, 637S and 637T of ITEPA to make provision about the amount of an individual’s lump sum allowance on the occurrence of a relevant benefit crystallisation event, including where more than one such event occurs on the same day in relation to an individual. It also inserts a new section 637U into ITEPA 2003 which treats lump sums already paid by an overseas pension scheme as a relevant benefit crystallisation event for the purpose of calculating an individual’s available allowances.

Regulation 3 amends section 255 of FA 2004 (c. 12) to allow the Commissioners for His Majesty’s Revenue and Customs (“ HMRC ”) to make regulations as to the making of assessments in respect of certain flexi-access drawdown lump sum death benefits under section 637M(2) of ITEPA 2003.

Regulation 4 amends Schedule 29 to FA 2004. Paragraph 8 of Schedule 29 is amended so that amounts transferred to a member’s Qualifying Recognised Overseas Pension Scheme (“ QROPS ”) after 6 April 2006 are included in the member’s relevant crystallised rights for the purposes of calculating the value of a member’s trivial commutation lump sum payment. The small lump sum payments specified in new sub-paragraph (3) of paragraph 8 are not included in this valuation.

It also amends paragraphs 12A and 16 of Schedule 29 to make consequential provision as to the availability of lump sum allowance and lump sum death benefit allowance.

Regulation 5 amends Schedule 36 to FA 2004. It amends the definition of “relevant protection provision” in each of paragraphs 18, 20A, 20B and 20E of Schedule 36 so that this has the meaning given in paragraph 20H(3) of that Schedule. It also amends paragraph 29 of Schedule 36 to substitute the method of calculating “ the applicable amount ” in relation to a defined benefits arrangement or a collective money purchase arrangement, and gives HMRC the power to make regulations as to the determination of the value of crystallised pension rights. It also amends paragraph 34 of Schedule 36 so that when calculating “ the additional lump sum amount ” in relation to a pension commencement lump sum the value of “F” in the calculation is either 1,073,100 or, if a relevant protection provision applies, the member’s lump sum and death benefit allowance. It also amends paragraph 34A of Schedule 36 to make minor amendments to the modified version of section 637Q(6)(b) of ITEPA 2003.

Regulation 6 amends section 30 of the Income Tax Act 2007 (c. 3) to omit section 214 of FA 2004 from provisions included in the calculation of a person’s income tax (section 214 imposed the lifetime allowance charge and was repealed by FA 2024).

Regulation 7 makes minor amendments to Schedule 6 to FA 2014 (c. 26) , as to transitional protections relating to the new standard lifetime allowance.

Regulation 8 makes minor amendments to Schedule 4 to FA 2016 (c. 24) as to transitional protections relating to the lump sum allowance and the lump sum and death benefit allowance.

Regulation 9 amends Schedule 9 to FA 2024. Paragraph 127A of Schedule 9 is amended so that individuals with enhanced protection have the full amount of the member’s overseas transfer allowance available, and to make provision as to the reduction of the individual’s lifetime allowance previously-used amount where one or more crystallised drawdown amounts are attributable to benefit crystallisation events occurring before 6th April 2024. Paragraph 127B is amended to require individuals issued with a transitional tax-free certificate who subsequently become a member of a new pension scheme to send a copy of the certificate to the scheme administrator of the new pension scheme. Paragraph 129 is amended to substitute a new provision in the calculation of the lifetime allowance previously-used amount.

Part 3 of these Regulations contains provisions which amend subordinate legislation.

Regulation 10 makes minor amendments to the Pension Sharing (Pension Credit Benefit) Regulations 2000 ( S.I. 2000/1054 ) as to pension credit benefit in lump sum form.

Regulation 11 makes amendments to the Registered Pension Schemes (Accounting and Assessment) Regulations 2005 ( S.I. 2005/3454 ) which are consequent on the amendments made to FA 2004 by regulation 3 of these Regulations.