UK LSA & LSDBA Calculator 2027

What Replaced the Lifetime Allowance?

The UK Lifetime Allowance (LTA) — which capped the total tax-privileged pension savings at £1,073,100 — was abolished 6 April 2024 by the Finance Act 2024 and replaced with two new allowances. The Lump Sum Allowance (LSA) caps tax-free pension cash at £268,275 (the same as the old 25% LTA cap). The Lump Sum and Death Benefit Allowance (LSDBA) caps total tax-free lump sums (including death benefits) at £1,073,100. Income drawdown above these allowances continues to be taxed at the member's marginal income tax rate, but there is no longer a separate Lifetime Allowance Charge of 25% or 55% on amounts over the cap (source: HMRC PTM176000, Finance (No. 2) Act 2023).

Lump Sum Allowance (LSA) £268,275

The LSA is a lifetime cap on tax-free pension cash you can take across all schemes. Each Pension Commencement Lump Sum (PCLS — the 25% tax-free portion of a drawdown) reduces your remaining LSA. Once exhausted, all subsequent lump sums are fully taxable as income. Unlike the abolished LTA charge, there is no 25% surcharge — but you lose the tax-free element. Key planning points: (1) defer crystallising more than necessary to preserve LSA, (2) consider partial drawdown (UFPLS) which uses LSA on the 25% tax-free portion only, (3) couples should split pension wealth where possible to use both individuals' £268,275 allowances.

Lump Sum and Death Benefit Allowance (LSDBA) £1,073,100

The LSDBA is a separate, larger allowance covering all tax-free lump sums including: PCLS (counts toward both LSA and LSDBA), serious ill-health lump sums, defined benefit lump sum death benefits, and uncrystallised funds death benefits paid before age 75. Lump sum death benefits paid before age 75 are tax-free up to LSDBA (otherwise taxed at recipient's marginal rate). After age 75, all death benefits are taxable as income to the recipient regardless. The LSDBA primarily affects high-wealth pension holders whose dependants might inherit large lump sums; under £1.07M total tax-free death benefits, it has no practical effect.

2026/27 and 2027/28 Considerations

Both LSA and LSDBA remain frozen at their 2024 nominal values (£268,275 and £1,073,100) — no inflation indexation in current legislation. This is fiscal drag: as pensions grow, more savers approach the limits in real terms. The Labour government has not announced changes for 2027/28 in their first Spring Budget. Watch for: (1) consultation on uniformly taxing pension income above LSA, (2) potential reintroduction of an LTA-style charge above LSDBA, (3) inheritance tax application to undrawn pensions starting April 2027 (already announced — IHT will apply to pension pots not crystallised by death). The IHT change is the single biggest issue affecting UK pension planning for 2026/27 onward.

LTA Protection Holders

Old LTA protections (Fixed Protection 2014/2016, Individual Protection 2014/2016, Enhanced Protection) carried forward into the new regime. Holders retain their protected amount as their LSA + LSDBA limit (subject to the 25% LSA = 25% × protected amount cap). Lost protection due to post-2016 contributions can sometimes be re-acquired under transitional rules — consult an IFA. New "transitional certificates" allow members crystallising pre-2024 amounts to claim against the original LTA framework if more beneficial. Compare with our annual allowance calculator, pension drawdown calculator, inheritance tax calculator, salary sacrifice pension.

Last updated April 2026. Estimates only — pension rules are complex; consult a regulated UK IFA. Sources: HMRC PTM, Finance (No. 2) Act 2023, FCA.