Lifetime allowance.

When an individual's benefits come into payment (a benefit crystallisation event) they will be tested against a ceiling known as the lifetime allowance (LTA).

The standard LTA for tax year 2018/19 is £1.03 million. For tax year 2019/20 it will be £1.055 million. For the tax year 2017/18, it was £1 million.

Provided the value of all an individual's benefits from all Registered Pension Schemes which are put into payment do not exceed their remaining LTA there should be no additional tax charge.

However, when benefits are put into payment, if the total value of the fund used to provide the benefits exceeds the individual's remaining LTA, there will be a tax charge on the excess of 25%, or 55% if the excess is taken as a lump sum.

Types of lifetime allowance protection

LIfetime allowance (LTA) protection was introduced to prevent individuals with previously accumulated pension savings under existing regimes being disadvantaged should their funds exceed subsequent reductions in the standard LTA.

This has led to a number of different LTA protections since 2006:

There are currently only two types of LTA protection which individuals can still apply for:

Protection Am I eligible and what does it do? Can I keep building up my pension? Other types of protection you can
hold at the same time
Other types of protection you cannot hold at the same time

Individual protection 2016

Available provided your pension savings were worth more than £1m at 5 April 2016.
Protects your LTA to the lower of:

- the value of your pension savings at 5 April 2016
- £1.25million

Yes, but when you put benefits into payment and their value exceeds your protected LTA, the excess will be subject to a tax charge.

Enhanced protection

Fixed protection 2012

Fixed protection 2014

Fixed protection 2016

Primary protection

Individual protection 2014

Fixed protection 2016

Available provided you or your employer haven't added to any of your pension schemes since 5 April 2016 and have opted out of any workplace pension scheme by 5 April 2016.

Fixes your LTA at £1.25 million

No, except in limited circumstances. If you do, you will:

- lose your Fixed protection 2016
- pay tax on any excess above the standard LTA when you put benefits into payment.

Individual protection 2014

Individual protection 2016

Enhanced protection

Primary protection

protection 2012

Fixed protection 2014


Individual protection 2016 will remain dormant until you lose or give up one of your previous protections.

Individual protecton 2014 will override fixed protection 2016 but any contributions paid after 6 April 2016 will result in your fixed protection 2016 being lost.

​You must apply online to HMRC for fixed protection 2016 or individual protection 2016. Protection can be applied for online to HMRC.

Please note:

  • If protection is lost, and/or if pension savings put into payment exceed any protected level of LTA, a LTA charge may apply. Protection may also be affected by auto-enrolment.
  • The LTA charge for benefits put into payment in excess of the LTA is 55% if paid as a lump sum, or 25% if paid as pension income, which itself is then subject to tax under usual PAYE rules.
  • The value of an individual’s benefits that came into payment before 6 April 2006 is only taken into account for LTA purposes where the individual also has benefits that come into payment after 5 April 2006.
  • If the standard LTA increases beyond an individual's protected LTA, the standard LTA will then replace the lower protected LTA.