RPSM11201030 - Member Pages: Lifetime allowance: Tax consequences: The tax charge

The tax charge

Retaining benefits in the scheme and paying a pension

If any excess over the lifetime allowance is retained within the scheme, to pay a pension, the chargeable amount is taxed at 25%

Benefits paid as a lump sum

If the rules allow, after a members lifetime allowance is used up and the member still has benefits available under the scheme, the member may take those benefits as a lump sum. Where excess funds are used to do this the payment is known as a lifetime allowance excess lump sum.

A higher tax charge of 55% is imposed on any benefits taken in this way.