Lifetime Allowance

Overview

The Lifetime Allowance (LTA) was introduced in April 2006 as a way of capping the tax-efficient withdrawals you can take from your pensions.

Protection from an LTA charge

If you were concerned about a potential LTA charge in previous tax years you might have considered applying for one of the various forms of LTA protection which were available. These protections are too complex to explain here, but in summary the types of protection available were:

  • Primary Protection
  • Enhanced Protection
  • Fixed Protection 2012
  • Fixed Protection 2014
  • Individual Protection 2014

You may be to apply for 2 types of LTA protection (the deadline for Individual Protection 2014 was 05/04/2017). The 2 forms of LTA protection still available are:

  • Fixed Protection 2016
  • Individual Protection 2016

You can read more about these protections on this page: Lifetime Allowance Protection

 

LTA charge

If the value of the benefits you take from your pension exceeds the LTA in the tax year you take the benefits you may be subject to a LTA charge. In this scenario you will be given a choice between drawing the excess as a lump sum or as an income. The tax charges are as follows:

Excess over LTA drawn as LTA charge on excess
Lump sum 55%
Income 25% (plus Income Tax)

 

Lifetime allowance amounts

The LTA has changed a number of times since 2006, as shown in the table below:

Lifetime Allowance

Tax year Lifetime Allowance (LTA) amount
2006-07 £1.50M
2007-08 £1.60M
2008-09 £1.65M
2009-10 £1.75M
2010-11 £1.80M
2011-12 £1.80M
2012-13 £1.50M
2013-14 £1.50M
2014-15 £1.25M
2015-16 £1.25M
2016-17 £1.00M
2017-18 £1.00M
2018-19 £1.03M

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