Pension tax guide
How much can I take from my pension tax-free?
The old pension Lifetime Allowance was abolished on 6 April 2024. It was replaced by new limits governing tax-free lump sums, including the Lump Sum Allowance and Lump Sum and Death Benefit Allowance.
The new system
The Lifetime Allowance no longer exists.
HMRC confirms that the standard Lifetime Allowance was abolished from 6 April 2024. Instead, limits now apply to certain tax-free lump sums paid during life and on death.
The tax treatment depends on the type of benefit taken, your remaining allowances and your individual circumstances.
Tax-free cash
What is the Lump Sum Allowance?
For 2026/27, the standard Lump Sum Allowance is £268,275. GOV.UK states that you can usually take up to 25% of pension benefits as a tax-free lump sum, subject to this overall allowance.
It applies across your pensions. It is not a fresh £268,275 allowance for every pension plan you hold.
Amounts above the available allowance that would otherwise have been tax-free are generally subject to Income Tax.
Ill health & death
What is the Lump Sum and Death Benefit Allowance?
The standard Lump Sum and Death Benefit Allowance for 2026/27 is £1,073,100. It applies to certain tax-free lump sums, including some serious-ill-health and death-benefit payments.
Tax-free lump sums you take during your lifetime can also use part of this allowance, so the amount remaining for relevant death benefits can be lower later.
Transitional rules
Already took pension benefits before 6 April 2024?
Previous pension benefits can affect how much of the new allowances remains. MoneyHelper explains that providers may use the amount of Lifetime Allowance previously used and assume 25% was taken tax-free under the transitional calculation.
Where eligible, a transitional tax-free amount certificate can allow actual historic tax-free lump sums to be used instead. This should be checked before taking further relevant benefits because timing conditions apply.
Older protections
Your personal allowance may be higher than the standard amount.
Some people with historic Lifetime Allowance protection can have a protected or enhanced Lump Sum Allowance and Lump Sum and Death Benefit Allowance.
Protected tax-free cash can also exist within particular pension schemes. This is one reason an older pension should be checked carefully before transfer or consolidation.
Check historic benefits
Find out what tax-free cash has already been taken and how providers have recorded it.
Check protections
Confirm whether any Lifetime Allowance protection or scheme-specific protected tax-free cash applies.
Withdrawal planning
Tax-free cash is an allowance, not necessarily a target.
Being able to take tax-free cash does not automatically mean taking the maximum immediately is the right approach. Consider what the money is for, what remains invested, future income needs and the tax treatment of later withdrawals.
Purpose
Is the cash needed for spending, debt repayment, reserves or another defined objective?
Remaining pension
How much retirement income must the pension continue to support?
Tax
How will taxable pension withdrawals interact with other income?
Estate planning
Pension death-benefit and Inheritance Tax rules should be considered as part of the wider plan, particularly with the legislated changes from April 2027.
Personal retirement advice
Planning to take tax-free cash?
A personal review can establish your remaining allowances, check historic benefits and protections, and consider how withdrawals fit with your retirement income and wider tax position.
Book a conversationThis guide is for general information only and is not personal financial or tax advice. Pension and tax rules can change and protected allowances depend on individual history. Content checked against current HMRC/GOV.UK and MoneyHelper guidance on 15 September 2026.