Your Pension - Your Future 

There is no limit to the amount that you can contribute to a registered pension scheme. However, there is a limit to the tax relief you can get on those contributions. For most people the limit is the higher of your UK taxable earnings, or £3,600.

However, for those with higher earnings there are some additional limits to be aware of:

Annual Allowance 

The Annual Allowance (AA) is the amount you can build up in your pension arrangements in a single tax year before a tax charge may apply.

Since April 2023, this limit has been set at £60,000.

If your UK earnings are in excess of £200,000 then this limit may be reduced, this is known as the Tapered Annual Allowance and more information can be found in our pension tax limits guide.

Lump Sum Allowance (LSA)

The Lump Sum Allowance (LSA) is one of the new allowances introduced following the abolition of the Lifetime Allowance in April 2024. This is the limit on the total tax-free benefits you can receive, across all of your pension arrangements, when you choose to take them.

Most people are able to take up to 25% of the total value of their benefits as a tax-free lump sum at retirement. The LSA limits this tax-free element to £268,275. This is the total limit that applies across all of your pension arrangements and does not reset.

Lump Sum and Death Benefit Allowance (LSDBA)

Also introduced in April 2024 was the Lump Sum and Death Benefit Allowance (LSDBA). This is the limit on the total tax-free benefits you can receive under the LSA and the total tax-free benefits that can be payable in the event of your death, or when you take a serious ill-health lump sum.

The LSDBA is set at £1,073,100. This limit also applies across all of your pension arrangements and does not reset.

Important things to know 

Although the Lifetime Allowance no longer applies, any protection you hold may provide you with a higher amount of LSA or LSDBA. You should let us know as soon as possible if you have any form of Lifetime Allowance protection.

We have set out more information in this pension tax limits guide to help you if you think you may be affected. 

Ask for help from an IFA

Please remember it's your personal responsibility to understand your pension(s) and the tax rules that apply - if you are in any doubt you should seek help from any independent financial adviser (IFA) or a chartered tax accountant. Our aim is to give guidance and help only, and we cannot give any kind of tax related or financial advice.