Lifetime Allowance replacement: lump sum allowance rules clarified
Two years after the Lifetime Allowance was abolished, HMRC published further guidance on the lump sum allowance and lump sum and death benefit allowance.
By Money Guide editorial team
Published:
Two years after the abolition of the pensions Lifetime Allowance, HMRC has published further guidance clarifying how the replacement allowances work in practice. The two main figures are the Lump Sum Allowance (£268,275) and the Lump Sum and Death Benefit Allowance (£1,073,100).
The Lump Sum Allowance caps the total tax-free lump sums an individual can take across all their pensions during their lifetime. The Lump Sum and Death Benefit Allowance caps the combined total of tax-free lifetime lump sums and tax-free death benefit lump sums.
People with pre-existing Lifetime Allowance protections (fixed, individual, enhanced) generally retain higher personal allowances. Anyone who took benefits in the years immediately before abolition should check whether they have a residual allowance calculation that increases their available lump sums.
Pension Wise (the free, government-backed guidance service for over-50s with DC pensions) can talk people through their options before drawing benefits. It does not give personal recommendations.