The lifetime allowance is the limit you can build up in pension benefits over your lifetime while still enjoying the full tax benefits.
For the tax year 2023/24, the lifetime allowance is £1,073,100.
If you go over the allowance, you’ll generally pay a tax charge on the excess amount if you:
- take it as income
- transfer overseas, or
- reach the age of 75 with untouched pension.
If you’re under 75 and transfer out of UK registered pensions into a QROPS, the value of the transfer will be tested against the lifetime allowance. If it’s over your unused allowance, this could result in a tax charge of 25% on the excess.
If you’re under 75 and transferring into a UK registered pension from a QROPS, this will usually result in an increase to your lifetime allowance.
If either of these situations could apply to you, we recommend that you speak to a regulated financial adviser.