RPSM11105090 - Technical Pages: Lifetime allowance: Where the lifetime allowance is used up: Overview: Nature of the lifetime allowance charge

Nature of the lifetime allowance charge

The lifetime allowance charge is a charge to income tax, but the amount on which it is charged is not income under the taxation provisions generally. The charge is, broadly, a recovery of tax relief previously given, measured against the value of an individual’s tax relieved pension savings. The charge is separate from any income tax due on any pension payments actually made.

The legislation sets this out for the avoidance of doubt.

This treatment means that an individual will not be able to set any allowances, losses or reliefs against the lifetime allowance charge, and that the amount will not count as pension income, or any other kind of income, for the purposes of the UK’s bilateral double taxation conventions.