Pensions lifetime allowance to be abolished from 6 April 2024

The pensions lifetime allowance was abolished from 6 April 2024, a measure included in the Finance Bill 2023-24 and confirmed by Royal Assent on 22 February 2024, when the Bill became the Finance Act 2024¹. HM Revenue and Customs published a tax information and impact note explaining the policy, titled abolition of the lifetime allowance from 6 April 2024¹.

The change was announced by Chancellor Jeremy Hunt in the Autumn Statement on 22 November 2023¹. The Commons debated the associated Ways and Means resolutions on 22, 23 and 27 November 2023, and the House did not divide on any of them¹. The Bill's second reading took place on 13 December 2023 and was agreed to on division, by 291 ayes to 54 noes, after an amendment to decline it was negatived by 46 ayes to 296 noes¹. It then passed through a Committee of the Whole House on 10 January 2024, a Public Bill Committee on 16 January 2024, and Report Stage and third reading on 5 February 2024, where third reading was agreed to by 283 ayes to 39 noes¹.

The lifetime allowance was the maximum total value of pension savings that could be built up without an additional tax charge before it was abolished on 6 April 2024². The Scottish Public Pensions Agency has set out the sequence: the UK Government abolished the lifetime allowance charge on 6 April 2023, with the new rate set as the individual's marginal tax rate, and the allowance itself was then abolished from 6 April 2024 by the Finance Act 2024³.

Protections taken out under the old rules may still have effect. If someone has enhanced protection or fixed protection and is automatically enrolled into a workplace pension, they may lose that protection unless they opt out, and if protection is lost they must tell HM Revenue and Customs². The lifetime allowance has been abolished, but these protections may still affect pension arrangements².

Why it matters for households

The removal of the lifetime allowance means there is no longer an upper limit on the total amount of pension saving that can be built up without an additional tax charge, for savings built up from 6 April 2024². The annual allowance still applies: tax relief on contributions is limited to an annual allowance, above which tax is charged, and pension savings above it may trigger an annual allowance tax charge⁴. Unused annual allowance from the last three tax years may be carried forward, which can reduce or remove that charge⁴.

For people who hold enhanced or fixed protection, the practical position is more complicated. Automatic enrolment into a workplace pension can put that protection at risk unless the person opts out, and losing protection must be reported to HM Revenue and Customs². Employers must tell staff the start and end dates of the one-month opt-out period when they are automatically enrolled².

The change applies across the UK tax system, but pension schemes in different parts of the UK are implementing related changes on their own timetables. In Scotland, the Scottish Public Pensions Agency gave guidance to administering authorities in June 2024 confirming that they must offer members who are retiring the opportunity to take benefits that would have been in excess of the lifetime allowance as a pension commencement excess lump sum³.

What happens next

The Finance Act 2024 received Royal Assent on 22 February 2024, so the abolition is in force¹. The Scottish Public Pensions Agency consultation on changes to the Local Government Pension Scheme (Scotland) Regulations 2018 ran for 12 weeks from 2 September 2025 to 25 November 2025, covering a range of amendments including McCloud and other technical changes³. No further UK-wide legislative steps on the lifetime allowance have been reported.