The lifetime allowance abolition is the removal of the cap on the total pension savings that could be built up before extra tax applied. The charge ended in April 2023 and the allowance was fully abolished from 6 April 2024.
In one line: The lifetime allowance abolition scrapped the overall limit on pension savings, replacing it with separate lump sum allowances.
How the lifetime allowance abolition works
The change was made by the Finance Act 2024 and is administered by HMRC. The old lifetime allowance of 1,073,100 GBP no longer applies, so there is no longer a tax charge simply for building a large pension pot.
In its place sit a lump sum allowance of 268,275 GBP and a lump sum and death benefit allowance of 1,073,100 GBP for 2026-27 (HMRC), which limit tax-free payments rather than total savings.
For example, someone with a 1.4 million GBP pot once faced a lifetime allowance charge on the excess. Now growth above the old cap is no longer penalised, though tax-free cash remains limited.
Lifetime allowance vs the annual allowance
The lifetime allowance was a ceiling on total pension savings across a lifetime and has now gone. The annual allowance, which caps tax-relieved contributions each year, still applies at 60,000 GBP for 2026-27 (HMRC).
Abolition removed the lifetime cap but left the new lump sum allowances controlling how much can be drawn tax-free.
Primary source: Finance Act 2024 (legislation.gov.uk)