Lifetime Allowance
What is The Lifetime Allowance (LTA)?
The maximum combined amount of pension savings, (excluding the State Pension) that you as an individual are permitted to hold as a total in ALL your pensions without incurring a tax charge.
Why was it introduced?
This legislation is not unique to the NHS, as the principles apply to all pension holders however, the excellent benefits that the NHS Pension Scheme provides mean that a number of NHS employees had consider the LTA and how it impacted them.
The concept of the LTA was first introduced in April 2006 through the Finance Act. This date is often referred to as ‘A-Day’ or ‘pension simplification’ but, invariably, ‘simple’ can be the furthest thing from the truth. For the first few years the allowance increased, then from 2012 this changed as shown in the table below:
| Tax Year | Lifetime Allowance |
|---|---|
| 2011/12 | £1.8m |
| 2012/13-2013/14 | £1.5m |
| 2014/15 | £1.25m |
| 2016/17 | £1.05m |
| 2017/18 | £1m |
| 2018/19 | £1.03m |
| 2019/205 | £1.055m |
| 2020/21-2022/23 | £1.073m |
| 2023/24-Present | No Charge applied |
Although the Lifetime Allowance has now gone, it has been replaced by two new allowances that may affect your pension(s).