RPSM04100030 - Technical Pages: Taxation: Overview: The annual allowance charge and lifetime allowance charge

The annual allowance charge and lifetime allowance charge

There is no limit on the amount of pension saving an individual can build up in a registered pension scheme. There is also no absolute limit on the amount of benefits that can be provided from such a scheme.

However, there are two key controls that limit the tax relief on pension saving. These are

• the annual allowance - this limits the amount of tax relief available on pension savings in respect of an individual in a tax year. Where the increase in tax relieved pension savings exceeds the annual allowance in relation to a tax year, an annual allowance charge will arise (see RPSM06100000).
• the lifetime allowance - this limits the amount of benefits that an individual can draw from all registered pension schemes in their lifetime, and in certain circumstances, the benefits that can be provided from such schemes on their death, without triggering the lifetime allowance charge (see RPSM11100000).