An introduction to the lifetime allowance
The lifetime allowance is the total amount you can build up in all your pension savings without incurring a tax charge.
When you start to take benefits from your pension schemes, you also start to use up your lifetime allowance. This happens progressively as you draw on your pension savings (for example through the payment of a tax-free lump sum or at retirement through regular pension payments). These ‘benefit crystallisation events’ gradually use up your lifetime allowance and, if you exceed the lifetime allowance, you’ll have to pay a lifetime allowance charge on any further benefits you take.
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