The Lump Sum Allowances After the Lifetime Allowance
Written and reviewed by the Pension Tax Accountants editorial team. Last reviewed 29 July 2026.
The Lifetime Allowance was abolished from 6 April 2024, and the Lifetime Allowance charge went with it. In its place the tax system now uses two allowances that control the tax-free lump sums a pension can pay.
These are the lump sum allowance, which caps tax-free cash in your lifetime, and the lump sum and death benefit allowance, which also takes in lump sums paid on death. This guide explains how the two figures work, not which benefits to take, which is regulated financial advice.
The End of the Lifetime Allowance
The Lifetime Allowance was abolished from 6 April 2024 by the Finance Act 2024, which removed the Lifetime Allowance charge and replaced the old single limit with a set of lump sum allowances.
The change did not remove all limits, it moved them. Instead of testing the whole value of your pension against one ceiling, the rules now test the tax-free lump sums you take.
The Lump Sum Allowance
The lump sum allowance, or LSA, is £268,275. It is the normal ceiling on the total tax-free pension commencement lump sums you can take across all your pensions in your lifetime. Lump sums above it are taxed as income.
The £268,275 figure mirrors 25% of the old Lifetime Allowance, which is why the familiar quarter still frames most tax-free cash. HMRC covers the LSA in its lump sum allowance guidance.
The Lump Sum and Death Benefit Allowance
The lump sum and death benefit allowance, or LSDBA, is £1,073,100. It covers tax-free lump sums taken in your lifetime and certain lump sums paid on death together, so lifetime tax-free cash uses up part of the same allowance that death benefit lump sums draw on.
Because the two allowances overlap, tax-free cash taken while you are alive reduces what is left for tax-free lump sums on death. That link matters most alongside the inheritance tax rules on pensions.
Tax Free Cash and the 25% Rule
Tax-free cash is normally up to 25% of the value of the pension you are crystallising, capped by the lump sum allowance. For most people the 25% figure is the binding limit, and the LSA only bites on larger pensions.
The interaction with the annual allowance is worth keeping in view, since one governs what goes in with relief and the other what comes out tax-free.
The Normal Minimum Pension Age
None of these lump sums can normally be taken before the normal minimum pension age, which is 55. It rises to 57 from 6 April 2028, so the age at which tax-free cash becomes available is moving.
Whether to take a lump sum, and when, is a regulated financial advice question. We handle the tax measurement against the allowances, not the decision itself.