The lump sum allowance (LSA) and lump sum and death benefit allowance(LSDBA) replaced the lifetime allowance with affect from 6 April 2024. The standard LSA is £268,275 and the standard LSDBA is £1,073,100. Where you have had a lifetime allowance event prior to 6 April 2024, your LSDBA and LSA will be reduced to account for those. Where you have a specific form of lifetime allowance protection or enhancement your LSDBA and LSA will be uplifted. See below for further details.
Lifetime allowance protection
Where you hold a valid form of lifetime allowance protection, both your LSDBA and LSA are uplifted by the amount stated in the certificate issued to you by HMRC.
Lifetime allowance protections include enhanced and primary protection; fixed protection 2012, 2014 and 2016; individual protection 2014 and 2016. You can still apply for certain lifetime allowance protections, please click on the link below for more information.
Protect your lifetime allowance
Please note that due to unintended consequences in the legislation introducing the changes that included the abolition of the LTA, HMRC have recommended that anyone with enhanced protection should consider deferring taking their benefits until the legislation has been corrected.
Lifetime allowance enhancement
Where you hold a lifetime allowance enhancement factor, only your LSDBA is enhanced to factor the uplift. Your LSA will remain protected at your standard or uplifted protected amount (see the example above).
The specific amount enhancement factor and your revised lifetime allowance limit should be stated in the certificate issued to you by HMRC. Lifetime allowance enhancements can include an overseas enhancement factor.
If applicable, you can still apply for an enhancement factor up until 5 April 2025. The circumstances in which an enhancement factor may be relevant are very fact and circumstance specific, and professional tax advice should be sought if you think this may apply to you.
Examples
Lifetime allowance protection
Amy holds fixed protection 2012 which uplifts her lifetime allowance to £1,800,000. As at 6 April 2024, Amy has taken no pension benefits and so her LSDBA will be £1,800,000 and LSA will be £450,000.
Lifetime allowance enhancement
Amy holds a valid lifetime allowance overseas enhancement factor which uplifts her lifetime allowance to £2,100,000. Amy does not have any lifetime allowance protections. As at 6 April 2024, Amy has taken no pension benefits and so her LSDBA will be £2,100,000 and LSA will be £268,275.