Unlock Your Pension’s Potential: A Guide to Tax-Free Allowances

Unlock Your Pension’s Potential: A Guide to Tax-Free Allowances

Pension / June 12, 2025

Your pension isn’t just for retirement—it offers valuable tax advantages. One of the key perks is the ability to take part of your pension tax-free. Here’s what you need to know about the latest UK pension tax-free allowances:

1. Tax-Free Cash (PCLS):
You can normally take up to 25% of your pension pot as a tax-free lump sum. However, a new overall limit applies from April 2024: the Lump Sum Allowance (LSA), which is £268,275 for most people. Any tax-free amounts taken before 6 April 2024 count towards this.

2. Lump Sum and Death Benefit Allowance (LSDBA):
This new limit, introduced in April 2024, caps the total tax-free lump sums (including certain death benefits) you can receive across all pensions at £1,073,100.

3. Annual Allowance:
This is the amount you can pay into your pensions each year with tax relief, currently £60,000. If you earn over certain thresholds, or flexibly access your pension, this limit may drop to as low as £10,000.

4. Carry Forward:
Unused Annual Allowance from the past three years can be carried forward, letting you make larger contributions if eligible.

Understanding these allowances—especially after recent changes—helps you make smarter decisions, so you can maximise your retirement income while avoiding unnecessary tax. Stay up to date to get the most from your pension savings.

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This bespoke price plan is suitable for the companies who are VAT registered, with more directors, shareholders and employees. Also, annual turnover is more than 200k and requires further bespoke services.

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