The lifetime allowance has been the limit on how much an individual can build up in their pensions over their lifetime, whilst still enjoying the tax benefits. The lifetime allowance for most people was previously £1,073,000, but starting from 6 April 2023 the lifetime allowance (LTA) charge will no longer apply, meaning that clients are able to add more to their pension, as they wish.
Annual pension allowance
The annual allowance is the maximum amount of money an individual can pay into their pension each tax year without penalty. For the year ending 31 March this is £40,000.
During yesterday’s budget it was announced that there will be 50% increase to the allowance - to £60,000 a year. The change comes into force from 6 April 2023. Like the lifetime allowance, the annual allowance only applies to private pensions. If you go over the allowance, additional charges may apply.
The value of your investments and income arising from them can fall as well as rise in value and you might get back less than you invest.
The information contained herein does not contain and should not be construed as tax advice. Investors should independently assess, with professional financial, tax, legal and accountant advisors, the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences. Information correct at time of writing, UK Tax regime is subject to change.