Tax and pension benefits

You can, if you wish, pay up to 100% of your taxable earnings in any tax year (or £3,600 if greater) into any number of concurrent pension arrangements of your choice. However, there are limits on the total amount of contributions you can make into all of your various pension arrangements and get tax relief. There are also limits on the pension savings you can build up before they become subject to a tax charge. This is in addition to any tax due under the PAYE system on pension payments. If these limits are exceeded, a tax charge may be due.

There are two main allowances for pension savings – a lifetime allowance and an annual allowance.

The lifetime allowance is set by HMRC, and the standard lifetime allowance is currently set at £1,073,100.
Unless you have protections, the maximum pension commencement lump sum is capped at 25% of your available lifetime allowance and cannot exceed £268,275 (£1,073,100 x 25%).

The Government has confirmed that no one will pay a lifetime allowance charge for the tax year 2023/2024 onwards. From April 2024, the lifetime allowance will be abolished entirely.