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Introduction

The post FA 2024 pensions regime applies from 6 April 2024 and marks a shift in emphasis. This note focuses on the new regime from the viewpoint of taxpayers and advisers. The new approach centres on taxation of withdrawals from pension savings, lump sums and income, rather than on the value of the fund.

Under the previous rules, there was a lifetime allowance and a lifetime allowance charge. These provisions meant that on the occurrence of certain events, called crystallisation events, the pension fund was valued, and if the lifetime allowance threshold was exceeded, then a tax charge, the lifetime allowance charge, could apply.

These rules particularly impacted public sector workers, such as those working in the NHS, as they approached retirement age.

From 2023/24, the lifetime allowance charge ceased to apply, and from 2024/25, the lifetime allowance disappears and is replaced by specific lump sum allowances,