PTM024300 - General principles: overview of pensions taxation: annual allowance

As of 6 April 2024 there is no longer lifetime allowance. If you are looking for information about protections, enhancement factors and the lifetime allowance charge please see these pages on The National Archives. If you are looking for information about the principles of lifetime allowance and benefit crystallisation events please see these pages of The National Archives.

Section 227 Finance Act 2004

There is no limit on the amount of pension saving an individual can build up in a registered pension scheme nor is there an absolute limit on the amount of benefits such a scheme can provide. 

However, the following key control limits tax relief on pension savings.

The annual allowance

The annual allowance effectively limits the amount of tax relief on an individual’s pension savings in a tax year. If the increase in tax relieved pension savings exceeds the annual allowance for a tax year, an annual allowance charge will arise in respect of the excess amount (see PTM050000).