New pensions tax allowances
The lifetime allowance was the total amount of pension savings (apart from your State Pension) that you could build up while still getting the full tax benefits. With effect rom 6 April 2024, the lifetime allowance is replaced by three allowances:
The lump sum allowance (LSA)
The lump sum allowance (LSA) is a cap on the amount of tax-free cash you can take from your pension savings. For most people the LSA is £268,275 (which is 25% of the old Lifetime Allowance). If you had lifetime allowance protection or tax free cash protection, your LSA may be higher than the standard LSA.
The lump sum and death benefit allowance (LSDBA)
The lump sum and death benefit allowance (LSDBA) limits the value of the pension savings you can leave your beneficiaries tax free, if you die before you’re 75. All tax-free lump sums, including tax-free lump sums on retirement, Serious Ill Health Lump Sums and Death Benefit Lump Sums, count towards, and are limited to the LSDBA of £1,073,100. The LSDBA doesn’t apply if you die after 75, or if your beneficiaries take your pension as drawdown or as an annuity.
The overseas transfer allowance (OTA)
The overseas transfer allowance is a limit on the value of the pension savings you can transfer abroad without having to pay a tax charge.
To find out more about pension tax allowances and how these affect your benefits, visit the HM Revenue & Customs website.