Pension savings tax charges 02 - Value of pension benefits in excess of your Available Lifetime Allowance

Understanding the lifetime allowance for pension schemes

You can save as much as you like towards your pension but there is a limit on the amount of tax relief you can get. The lifetime allowance is the maximum amount of pension saving you can build up over your life that benefits from tax relief. If you build up pension savings worth more than your available lifetime allowance you'll pay a tax charge on the excess when you decide to take your benefits, turn 75 or transfer your pension overseas.

Check if your pension savings exceed the lifetime allowance

The lifetime allowance applies to any pension savings you have in:

• a registered pension scheme
• an overseas pension scheme that qualifies for UK tax relief for either you or your employer on or after 5 April 2006

The lifetime allowance is currently £1,073,100, unless you have some form of protection giving you a higher lifetime allowance.

The lifetime allowance applies even if you're in a pension scheme that you do not make payments into - for example if you're in a workplace pension that only your employer makes payments into.

Value of pension benefits in excess of your Available Lifetime Allowance, taken by you as a lump sum

If all or any part of the benefits which formed part of the excess over your Available Lifetime Allowance were taken as a lump sum, enter the total of the lump sum, or sums, including any tax paid by the scheme administrator.

Do not include tax-free lump sums paid with a pension which are payable within your Lifetime Allowance. Include lump sums paid for serious ill-health before age 75, but only enter the amount by which you exceed the Lifetime Allowance. Do not include a serious ill-health lump sum if it was paid to you when you had reached age 75. These lump sums are taxed separately and the tax will have been paid by the scheme administrator. Do include lump sums expressly paid as lump sums because you exceeded your Lifetime Allowance.

You can find the figures on the statement of tax you received from your scheme. The statement will show how the tax was worked out.