The lifetime allowance was the maximum that could be paid out from all your pensions (except your State Pension) before you had to pay extra tax. This was the allowance for retirement and death benefits that could benefit from tax relief between 6 April 2006 and 5 April 2024. It was abolished on 6 April 2024.
The lifetime allowance was replaced it with two new allowances.
- The lump sum allowance is the maximum amount you can receive tax-free from all your pensions when you retire. For most people, the allowance is £268,275. If you applied for any HM Revenue & Customs (HMRC) protection related to the previous lifetime allowance, explained above, your lump sum allowance may be higher.
- The lump sum and death benefit allowance is the maximum amount that can be paid out tax-free from all your pensions when you retire or die or suffer from serious ill health. For most people, the allowance is £1,073,100. If you applied for any HMRC protection related to the previous lifetime allowance, explained above, your lump sum and death benefit allowance may be higher.
Your pension scheme should tell you when a tax-free payment uses up any of your allowances.