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ARTICLE · 17 MARCH 2023

Government Abolishes Lifetime Allowance

Herbert Smith Freehills Kramer LLP
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He also announced an increase in the Annual Allowance from April 2023.

United KingdomEmployment and HR
Samantha Brown
Samantha Brown
Rachel Pinto
Rachel Pinto
Michael Aherne
Michael Aherne
Tim Smith
Tim Smith

In the biggest act of pensions tax simplification in many years, the Chancellor has today announced that the Lifetime Allowance will be abolished from April 2024 (with the Lifetime Allowance tax charge being removed from April 2023). He also announced an increase in the Annual Allowance from April 2023.

While the abolition of the lifetime allowance should make life easier for employers to retain experienced, highly skilled workers, particularly in the NHS, it creates uncertainty and complexity for many schemes and employers in the short term. Critically, pension providers and trustees also need to ensure that individuals who are preparing to access their benefits imminently are aware of this news, so that they do not face an unnecessary tax charge.

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