The LTA is the total amount you can build up from all your pension savings in your lifetime without incurring a tax charge. The LTA from 6th April 2014 is £1.25 million. From 6th April 2016, the LTA will reduce to £1 million.

Exceeding the Lifetime Allowance

If you are over the limit, tax on the excess is charged at:

    • 25% on your pension in excess of your personal LTA.
    • 55% on your lump sum

However, the maximum tax free lump sum is the lower of ,

    • 25% of the remaining capital value or,
    • the lower of 25% of the standard LTA (based on £1.8m for FP2012, 25% of £1.5m for fixed protection FP2014, Primary and Enhanced Protection and 25% of the value of your lta at 05/04/2014 for Individual Protection IP2014.)

The pension commencement lump sum automatically crystallises before the pension therefore using any available LTA first.

For changes to the Lifetime Allowance from 6 April 2016 please see 2016/17 LTA Changes and LTA Protection 2016.

Further information can be found on the factsheets below:

  • Joining or Rejoining a Pension Scheme because of Auto-Enrolment and its effects on Enhanced or Fixed Protection
  • Protected Pay Factsheet
  • Reduced Lifetime Allowance and Fixed Protection Factsheet (PDF 130KB)
  • Reduced Lifetime Allowance – Fixed Protection and Benefit Accrual in the HSC Pension Scheme
  • Reduced Lifetime Allowance – How this affects members with Enhanced Protection