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Pension and ISA allowances

Pension allowances

Tax Year Standard Annual Allowance Money Purchase Annual Allowance  Tapered Annual Allowance Tax-Free Cash Lump Sum and Death Benefit Allowance (LSDBA)

2025/2026 		 £60,000 £10,000 Tapered annual allowance applies to those with ‘adjusted income’ of more than £260,000 and ‘threshold income’ of more than £200,000 £268,275 £1,073,100
2024/2025  £60,000 £10,000 Tapered annual allowance applies to those with ‘adjusted income’ of more than £260,000 and ‘threshold income’ of more than £200,000 £268,275 £1,073,100

Glossary

Standard Annual Allowance

Standard Annual Allowance

The annual allowance is a limit to the total amount of contributions that can be paid to defined contribution pension schemes and the total amount of benefits that your clients can build up in a defined benefit pension scheme each year, for tax relief purposes.

Money Purchase Annual Allowance

Money Purchase Annual Allowance

If your clients have flexibly accessed their benefits, the Money Purchase Annual Allowance (MPAA) is the amount that can be paid in one year to their money purchase arrangements without a tax charge applying.

Tapered Annual Allowance

Tapered Annual Allowance

For the taper to apply, the limits on threshold income and adjusted income must both be exceeded. This reduces your clients’ Annual Allowance by £1 for every £2 of adjusted income above £260,000 subject to a maximum reduction of £50,000. The minimum reduced allowance is £10,000. The level of adjusted income at which the maximum reduction in the annual allowance is reached is £360,000.

Tax-Free Cash

Tax-Free Cash

Tax-Free Cash: Tax-free cash is usually limited to the lower of 25% of total benefits or the available Lump Sum Allowance or Lump Sum & Death Benefit Allowance. This means usually a maximum tax-free cash amount of £268,275 can be received by pension savers during their lifetime.

Lump Sum and Death Benefit Allowance (LSDBA)

Lump Sum and Death Benefit Allowance (LSDBA)

The Lump Sum and Death Benefit Allowance (LSDBA) is a limit on the total amount of tax-free lump sums that can be paid from a pension, including both during the member's lifetime and upon their death before age 75, with a standard limit of £1,073,100.

ISA allowances

Tax year ISA Allowance Junior ISA Allowance Lifetime ISA Allowance

2025/2026		 £20,000 £9,000 £4,000
2024/2025 £20,000 £9,000 £4,000

Glossary

ISA

ISA

ISA: Individual Savings Account that allows your clients to invest tax-efficiently, so they pay no UK tax on any income and capital gains they receive.

Capital Gains Tax Allowances

Tax Year Individual Capital Gains Tax Allowance

2025/2026		 £3,000
2024/2025 £3,000

Glossary

Capital gains tax

Capital gains tax

The tax on the profit made from selling an asset that has increased in value.

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