That charge would be £44,225 if taken as income (with income tax to pay when the money is withdrawn) or £97,295 if taken as a lump sum. If they crystallise the entire fund before 6 April, they will pay a lifetime allowance charge on the £179,600 excess. Take, for example, someone who has a £1.25 million pension pot today.

This will dramatically simplify pensions saving decisions for those close to or over the lifetime allowance and, crucially, remove the disincentive to take investment risk for anyone worried about being hit with a lifetime allowance charge as a result.Īs your pension is worth above the £1,073,100 lifetime allowance, you are in line to benefit from the Budget changes, so it will likely make sense to hold off making any benefit crystallisation decisions until 6 April if possible. However, from 6 April 2023, the lifetime allowance charge will be reduced to 0 per cent, with the Government eventually intending to scrap the lifetime allowance altogether. This charge will be 25 per cent if the excess is taken as income and 55 per cent if taken as a lump sum.

Today, if you breach the lifetime allowance, which stands at £1,073,100, you will pay a lifetime allowance charge on the excess. The headline change was about the lifetime allowance, which currently controls the total value of pension benefits someone can build up without being subject to a tax charge over their lifetime.

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