Lifetime Allowance (LTA) frozen until April 2026

Despite the government proposing that the lifetime allowance (LTA) would increase each year to keep pace with inflation, Rishi Sunak, earlier in the year, froze the LTA at its current level of £1,073,100 until April 2026.

This allowance restricts the total amount that can be saved in a pension before tax charges apply and many in the finance industry have highlighted this as a ‘stealth tax’.

The Treasury estimates that the freeze will raise £990m by 2025/26 as it is going to prevent people from saving more into pensions, so less income tax relief will be claimed. More and more people will also find themselves subject to Lifetime Allowance tax charges, where any growth above and beyond the £1,073,100 could be subject to a charge of up to 55%.

In a low inflation environment, the freeze would be less concerning, however, given the current outlook and potential for rising inflation in the near future, individuals who are either saving for retirement or at retirement should consider how this affects their plans.

For an initial, free, no-obligation chat around your retirement planning please contact one of our experienced Financial Planning Consultants on 01772 821021 or email Philip.brook@mooreandsmalley.co.uk  

The information given in this article should not be construed as financial advice. MHA Moore and Smalley are authorised and regulated by the Financial Conduct Authority (448716).