Lifetime allowance (LTA)
The lifetime allowance (LTA) for the 2021/22 tax year remains at £1,073,100, and in the Budget it was confirmed that the LTA was to be frozen at £1,073,100 until April 2026.
The LTA is a limit on the amount of pension savings that can be built up in pension schemes without triggering a tax charge when you take your pension.
Annual allowance (AA)
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 savings 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 examples on calculating LTA or AA, you can read our Tax Controls and Pensions savings factsheet.
We’ve also created a new Pension savings hub which helps you understand what to do if your pension savings in the EAPF have exceeded the standard annual allowance (AA) of £40,000.
Visit our Pension savings hub today!