22/10/2021

 

The pension savings you can make tax-free in each tax year (the year beginning 6 April) to all pension arrangements combined are limited to the Annual Allowance (AA).  The standard AA is currently £40,000, but a lower AA may apply if you have taxable income above a certain threshold, or if you have already accessed a DC pension pot flexibly.

The pension savings you can make tax-free over your lifetime are limited to the lifetime allowance (LTA).  The LTA for the 2021/22 tax year is £1,073,100, and the Chancellor announced in the March 2021 Budget that this limit will be frozen until 2026.  If your pension savings are worth more than this when you take your benefits, you’ll have to pay the LTA tax charge unless you have some form of LTA protection.  Further details of the LTA, including protection, are available from HMRC’s website: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual