Lifetime allowance
The lifetime allowance (LTA) for the 2020/21 tax year is expected to increase to £1,073,000 from 6 April 2020.
The LTA is a limit on the amount of pension benefit that can be paid from pension schemes without triggering a tax charge.
Annual allowance
Annual allowance (AA) is set by the Treasury and is currently £40,000. The AA is the amount by which the value of your pension benefits may increase in any one year without you having to pay an excess tax charge. Your personal AA may be less than £40,000 if your taxable income exceeds HMRC limits or you’ve accessed flexible benefits.
For more details and to see examples on calculating LTA or AA, you can read our Tax Controls and Pensions savings factsheet.