Lifetime Allowance Replaced LSA 2027 Calculator UK

What Replaced the Lifetime Allowance?

The Lifetime Allowance (LTA) was abolished on 6 April 2024 by the Spring 2023 Budget. From 6 April 2024 onwards two new limits apply: the Lump Sum Allowance (LSA) of £268,275 caps the total tax-free Pension Commencement Lump Sum (PCLS) you can take across all pensions; the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 caps total tax-free lump sums including serious-ill-health and death benefits.

How Much Can You Take Tax-Free in 2026/27?

Generally 25% of each pension you crystallise is tax-free, capped by your remaining LSA. If you have transitional protection (Fixed Protection 2012/14/16, Individual Protection 2014/16, Enhanced Protection), your LSA can be higher — these protections continue post-April 2024 provided they were notified to HMRC. Anything beyond the LSA is taxed at your marginal income tax rate (20%, 40%, or 45%).

What About the Old LTA Charge?

The 25% / 55% LTA tax charge no longer applies. Excess withdrawals are now treated as income and taxed at your marginal rate (often 40% or 45% if drawn as a single sum). Annuity purchase and scheme pension are no longer LTA-tested. The change broadly benefits those with pots over £1.073m, but the LSA cap on tax-free cash limits the upside for very large pots.

Source and Disclaimer

Rules sourced from gov.uk Pensions Tax Manual (PTM) and HMRC Pension Schemes Newsletter as of May 2026. This is an educational calculator and is not regulated financial advice. Consult a chartered IFA before crystallising significant pension benefits. Last updated: May 2026.

Source: gov.uk/government/publications/abolition-of-the-lifetime-allowance