What replaced the LTA
The Lifetime Allowance was abolished in April 2024 and replaced by three new allowances. The headline is the £268,275 Lump Sum Allowance — the cumulative cap on tax-free cash from all pensions. This guide covers all three new limits, what they mean for SSAS members, and how existing pre-2024 protections still work.
The Lifetime Allowance — the £1,073,100 cap on the total value of all your UK pension benefits — was formally abolished on 6 April 2024. What replaced it is a set of three new allowances that work in different ways and which most directors with significant SSAS funds need to understand. This guide explains what changed, what the new limits are, and what it means for a SSAS member in the 2026/27 tax year.
The legislative basis is the Finance Act 2024 (Schedule 9, which abolishes the lifetime allowance charge and introduces the new lump sum allowances) and the HMRC Pensions Tax Manual chapter PTM170000.
The end of the Lifetime Allowance — what changed in April 2024
For the two decades from "A-Day" in April 2006 to April 2024, the Lifetime Allowance set a cap on the total pension benefits an individual could build up tax-favoured. Drawing benefits in excess of the LTA triggered a Lifetime Allowance charge — up to 55% on lump sums and 25% on income above the cap.
The LTA charge was first reduced to zero in April 2023, and the LTA itself was then abolished in April 2024. There is now no overall lifetime cap on the value of UK pension benefits. In its place are three new individual allowances that control specific types of payment, not overall fund value.
The three new allowances
Lump Sum Allowance (LSA) — £268,275
The LSA is the total amount of tax-free cash you can take across all pension benefits over your lifetime. It is set at exactly 25% of the old Lifetime Allowance (£1,073,100 × 25%). Each pension commencement lump sum (PCLS) you take counts against the LSA, as do the tax-free elements of UFPLS payments.
Most SSAS members take a 25% tax-free lump sum when crystallising benefits. The LSA caps the cumulative total of those lump sums — you can no longer take 25% of a fund worth £2 million tax-free; the tax-free element is capped at £268,275, with the rest of the cash taxed as income.
Lump Sum and Death Benefit Allowance (LSDBA) — £1,073,100
The LSDBA is the total amount of lump sums that can be paid out tax-free from your pension, including both lifetime lump sums (PCLS and UFPLS tax-free elements) and lump sums paid on your death before age 75. It is set equal to the old LTA at £1,073,100.
For most members, the practical constraint is the LSA at £268,275 — it is much harder to breach the £1,073,100 LSDBA cap unless death benefits are paid as lump sums to non-dependents. Drawdown and beneficiary income passes outside this cap and is taxed as income on the recipient.
Overseas Transfer Allowance (OTA) — £1,073,100
The OTA caps the total value of pension benefits that can be transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS) without triggering the Overseas Transfer Charge. The OTA is set equal to the old LTA, with the OTC applied to transfers in excess.
What it means for SSAS members in practice
For the typical UK director with a SSAS valued at up to roughly £1 million, the LTA abolition simplifies retirement planning significantly. There is no longer a punitive charge for going over the LTA, and benefits can be drawn flexibly without LTA charge concerns. The 25% tax-free lump sum mechanic continues to work as members expect — provided the cumulative total stays within the LSA.
For directors with larger SSAS funds (or combined pension wealth above £1.073 million across multiple schemes), the LSA cap on tax-free cash becomes the binding constraint. Drawdown of the remaining 75% (and any amount above the 25% cap) is taxed as marginal-rate income when drawn.
Existing protections — Fixed Protection and Individual Protection
Members who registered for Fixed Protection 2012, 2014 or 2016, or Individual Protection 2014 or 2016, retain those certificates with adjusted protected lump sum allowances. The protection figures have been carried over to the post-LTA regime but with specific transitional calculations set out at PTM176000.
If you hold a protection certificate, your personal LSA is your protected lump sum amount (the lower of 25% of your protected LTA, or the protected lump sum figure depending on protection type), which can be substantially higher than the standard £268,275. The original protection conditions — including the restriction on making further pension contributions for some protection types — continue to apply.
Death benefits and the post-2024 regime
Death benefits paid from a SSAS depend on whether death occurs before or after age 75 and on how the recipient takes the benefits. Lump sum death benefits paid before age 75 count against the deceased's LSDBA and are tax-free on the recipient up to that limit. Beneficiary drawdown is taxed as income on the recipient if the deceased was 75 or over, and tax-free if death was before 75.
From April 2027, pension funds will be brought into the scope of Inheritance Tax — but this is a future change separate from the LTA abolition and is the subject of ongoing consultation. See our family SSAS pension guide for context on multi-generational planning.
Benefit Crystallisation Events under the old regime
Members who crystallised benefits before 6 April 2024 had each BCE measured against the LTA in force at the time. Those historical BCEs are converted into the new regime via a specific transitional calculation — your remaining LSA is reduced by the amount of tax-free cash you have already taken (or by 25% of the value of historical income drawdown crystallisations, in the default conversion). HMRC allows certain members to apply for a "Transitional Tax-Free Amount Certificate" if they want a precise calculation rather than the default.
What to read next
- SSAS contribution limits — the £60,000 Annual Allowance, MPAA, and carry-forward rules that govern what goes into a SSAS.
- SSAS drawdown rules — how flexible access pension drawdown works inside a SSAS.
- SSAS death benefits — how SSAS funds pass to dependents and nominees on death.
- SSAS Tapered Annual Allowance — the high-earner reduction in the £60,000 AA.
- HMRC SSAS pension rules — the full HMRC framework.
Important: Carry forward calculations can be complex, particularly if you have changed employers, held multiple pension schemes, or have any defined benefit pension entitlement. It is worth confirming carry forward calculations with a qualified adviser before making a large single-year contribution.
What Happens if You Exceed the Annual Allowance
If your total pension contributions — employer and personal, across all schemes — exceed your available Annual Allowance in a tax year, the excess is subject to an Annual Allowance charge. This is a tax charge levied on the individual member (not the employer), charged at the individual's marginal Income Tax rate.
For example, if a director has £60,000 of available Annual Allowance and the company contributes £80,000 in a single year, the £20,000 excess would be added to the individual's taxable income and taxed at their marginal rate — typically 40% or 45% for most directors in this position.
The charge effectively claws back the tax relief on the excess. This does not mean the excess contribution is returned; the money stays in the pension. But the tax advantage on that portion is neutralised.
HMRC allows a mechanism called "scheme pays" for large Annual Allowance charges — if the charge is at least £2,000 and the pension scheme is responsible for the excess, the scheme can pay the charge on your behalf in exchange for a reduction in your eventual pension benefits. For a SSAS, voluntary scheme pays is also available but requires trustee agreement.
The Money Purchase Annual Allowance (MPAA): £10,000
If you have already accessed your SSAS or another money purchase pension flexibly — for example, by taking income through flexi-access drawdown — the standard £60,000 Annual Allowance no longer applies to your money purchase pension contributions. Instead, you are subject to the Money Purchase Annual Allowance (MPAA), which is currently £10,000 per year.
The MPAA is designed to prevent individuals from recycling pension funds — taking money out in drawdown and immediately reinvesting it as a tax-relieved contribution. Once triggered, the MPAA applies permanently.
Actions that trigger the MPAA include:
- Taking income through flexi-access drawdown from any money purchase pension
- Receiving an uncrystallised funds pension lump sum (UFPLS)
- Purchasing a flexible (investment-linked) annuity where income can vary downwards
Taking your tax-free cash lump sum alone (without also taking income from drawdown) does not trigger the MPAA, provided the rest of the uncrystallised fund remains in drawdown but no drawdown income has been taken.
Critical Point: If you are still contributing to your SSAS — particularly through large employer contributions — triggering the MPAA could have serious consequences, limiting your annual contributions to just £10,000. Plan carefully before accessing pension funds flexibly if you intend to continue making significant contributions.
The Lifetime Allowance: Abolished from April 2024
Until April 2023, there was a limit on the total amount of pension savings you could build up in your lifetime before facing a tax charge — the Lifetime Allowance (LTA). In its final form, the LTA was £1,073,100.
The LTA has now been abolished. From 6 April 2024, there is no lifetime limit on the amount of pension wealth you can accumulate. This is a significant change for higher earners who were previously managing their SSAS contributions carefully to avoid the LTA charge.
However, the abolition of the LTA does not mean there are no limits on pension benefits. Instead, HMRC has introduced two new lump sum allowances:
| Allowance | Amount (2025/26) | What it covers |
|---|---|---|
| Lump Sum Allowance (LSA) | £268,275 | The maximum tax-free lump sums you can take during your lifetime (including tax-free cash on crystallisation) |
| Lump Sum and Death Benefit Allowance (LSDBA) | £1,073,100 | The total of tax-free lump sums (including death benefit lump sums) that can be paid from all your pension schemes combined |
For most directors, the practical effect is that the 25% tax-free cash entitlement is now capped at £268,275 — regardless of total fund size. Funds above this threshold that are drawn as lump sums will be subject to Income Tax at the individual's marginal rate. Pension income taken through drawdown remains subject to Income Tax in the usual way.
Contribution Rules in Practice: A Summary for Directors
| Rule | Detail (2025/26) |
|---|---|
| Annual allowance | £60,000 per individual across all pension arrangements |
| Employer contribution cap | None (but contributions above AA trigger an individual tax charge) |
| Personal contribution cap | The lower of £60,000 or 100% of relevant UK earnings |
| Carry forward | Up to 3 previous tax years of unused allowance; must be a scheme member in those years |
| MPAA (if drawdown taken) | £10,000 per year |
| Lifetime allowance | Abolished from 6 April 2024 |
| Tax-free cash maximum | £268,275 (Lump Sum Allowance) regardless of fund size |
| Annual allowance charge rate | Individual's marginal Income Tax rate on the excess |
Frequently Asked Questions
What is the SSAS Annual Allowance for 2025/26?
The standard Annual Allowance is £60,000 per member, per tax year. This applies to the total of all employer contributions, member personal contributions, and HMRC tax relief into the scheme (Finance Act 2004, s.228, as amended by Finance (No. 2) Act 2023). The allowance is per individual, not per scheme — it covers all your registered pensions combined.
Can I carry forward unused SSAS Annual Allowance?
Yes. You can carry forward unused Annual Allowance from the previous three tax years, provided you were a member of a registered pension scheme in each of those years. With full carry forward, a director could potentially contribute up to £240,000 in a single tax year (current year £60k + three prior years £60k each), subject to the company being able to support the contribution under the wholly-and-exclusively rule.
What is the Tapered Annual Allowance for SSAS?
If your adjusted income exceeds £260,000 in a tax year, your Annual Allowance is tapered. For every £2 of income over £260,000, the allowance reduces by £1, down to a floor of £10,000 (for adjusted income of £360,000 or more). The taper is calculated per tax year and depends on both threshold income and adjusted income tests.
Can my company contribute more to my SSAS than I earn in salary?
Yes — employer contributions are not capped by your salary. Personal contributions are limited to your relevant UK earnings (typically salary, not dividends), but employer contributions are limited only by the Annual Allowance and the company’s ability to satisfy HMRC’s wholly-and-exclusively test. This is why most director-shareholder SSAS contributions come from the company, not from the director personally.
Are SSAS contributions tax-deductible for my company?
Yes. Employer contributions to a SSAS are normally deductible against Corporation Tax in the accounting period they are paid, provided they meet HMRC’s wholly-and-exclusively test — the contribution must be made for genuine business purposes, not pure tax avoidance. A company paying Corporation Tax at 25% saves £15,000 of tax on a £60,000 SSAS contribution.
Do I get personal Income Tax relief on SSAS contributions?
Personal contributions get Income Tax relief at your marginal rate. Basic rate relief (20%) is added at source by the SSAS administrator; higher and additional rate relief is claimed via Self Assessment. Employer contributions don’t generate personal tax relief because the company has already received Corporation Tax deduction — they go into the scheme gross.
Is there a lifetime limit on SSAS contributions?
The Lifetime Allowance was abolished in April 2024 and replaced with the Lump Sum Allowance (£268,275) and the Lump Sum and Death Benefit Allowance (£1,073,100). These limit the tax-free lump sums you can take, not the total fund value or the total contributions you can make over your lifetime. There is no longer a cap on how large your SSAS pot can grow.
Can my SSAS receive contributions from more than one company?
Yes, if you are a member or director of more than one limited company. Each sponsoring employer can make contributions, subject to your overall Annual Allowance across all schemes. The contributions need to be made on a wholly-and-exclusively basis from each contributing company — the contribution amount must be defensible as remuneration for services rendered to that specific company.
Key Point: The £60,000 Annual Allowance applies per individual member of the SSAS. If your SSAS has three director members, the scheme as a whole could potentially receive up to £180,000 in combined contributions — £60,000 per person — subject to each individual staying within their own allowance.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. SSAS pensions are corporate pension schemes registered with HMRC and overseen by The Pensions Regulator (TPR), and do not require FCA regulation. Tax rules are subject to change and depend on individual circumstances. The information in this article is based on our understanding of HMRC rules for the 2025/26 tax year.