[ˈpɛnʃᵊn ˈlaɪftaɪm əˈlaʊəns]
The Pension Lifetime Allowance is the maximum you can withdraw from pension plans and schemes, tax-free. It was removed in 2023 but applies for older pensions.
The Pension Lifetime Allowance is the maximum amount that you can withdraw tax-free from a Pension scheme in a lifetime. In the 2022/23 tax year, the limit was £1,073,100. If you go over it, you must pay tax on the amount above the allowance. This rate of tax depends on the type of the type of Pension payment plan you have. It is 55% if you get it as a lump sum and 25% if you get it another way.
In the 2023 Spring Statement, the Pension Lifetime Allowance was removed. So, if you took your Pension from 6th April 2023, there is no lifetime allowance charge. Instead, you will pay Income Tax on some or all of the lump sum.
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