Lifetime Allowance (LTA)

The government announced plans in the 2023 Spring Budget to remove the LTA charge from 6 April 2023 and abolish the LTA allowance completely from 6 April 2024.

Draft legislation and a policy paper were issued in July 2023, see:

https://www.gov.uk/government/publications/abolishing-the-pensions-lifetime-allowance/abolition-of-the-lifetime-allowance

The lifetime allowance also affects how lump sum death benefits from uncrystallised funds, will be taxed for beneficiaries of those who die before the age of 75. These lump sums were previously tax-free to the extent that there was unused lifetime allowance.

Transitional rules will apply where pension savers have taken some benefits whilst the LTA existed, however we await HMRC Guidance on how these will apply.