Farewell LTA: Transitioning into the new pension regime

Lump sum allowance will cap tax-free cash from pensions

clock • 4 min read

As the abolition of the lifetime allowance approaches Josh Croft explains how the new regime will work in practice...

With just a few months to go before the lifetime allowance (LTA) is abolished from the pension tax rules, we now have the full draft rules of how the new regime will work. Back in last year's Spring Budget the chancellor announced the intention to remove the LTA from April 2024. Since then we have had various drafts of legislation amending and creating new rules. Broadly speaking under the new rules, pensions from next tax year will only be tested against a limit when they are paid as a lump sum. The new lump sum allowance (LSA) will cap tax-free cash from pensions paid during some...

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