Lifetime Allowance
here is a possible Lifetime Allowance charge if total pension funds exceed the Lifetime Allowance at the point when pension benefits are taken.
The Lifetime Allowance charge is applied to the excess over the allowance. This can apply in two different ways or both depending on how the excess is taken. The individual charges are:
• 25% if taken as income, and
• 55% if taken as a lump sum
It is unlikely that there will be much difference because, if someone takes the excess as income, he will be charged income tax on top of this tax charge, more than likely at 40%.
Details of the Standard Lifetime Allowance (SLA) are shown below.
| Tax Year | (SLA) |
| 2008/09 | £1.65 million |
| 2009/10 | £1.75 million |
| 2010/11 | £1.80 million |
| 2011/12 | £1.80 million |
| 2012/13 | £1.50 million |
The Standard Lifetime Allowance is the total capital value of all your pension arrangements, excluding your state pension, which you can build up without paying extra tax.
You can find more information about the reduction in the SLA and a new 'Fixed Protection' that you can apply to HMRC for here.
Last Updated: 21/10/2011
