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: