The pension lifetime allowance (LTA) was first introduced in 2006
There is no limit on the amount of UK pension savings an individual can hold. The lifetime allowance restricts the amount of tax relief you can get on your savings.
LTA tax is applied on high pension wealth, and doesn’t affect most people with modest retirement plans. UK taxpayers who contribute to pensions still gain good tax benefits. Savings to pensions gain tax relief and grow tax-free. The lifetime allowance acts as a limit to pension tax benefits.
What to do if you think your pension funds could be affected by the lifetime allowance limit:
- Use our free online calculators to find out if your pension fund could breach the lifetime allowance
- Assess your eligibility for lifetime allowance protection
- Register with HMRC if you qualify for protection
- Plan your income withdrawals
- Use other investments for future retirement savings
- Keep updated on legislation & tax adjustments, read our blog
- Consider your expected income tax position in retirement
- Talk to an expert
There are options available to those with funds approaching, or in breach of the lifetime allowance. It is important to seek professional, regulated financial advice before making any changes to your pensions.
We recently wrote an article in our blog – 5 planning ideas to safely avoid the lifetime allowance.