During the 2021/22 financial year, the amount you could draw from a pension at retirement without incurring additional tax was set at £1,073,100.
If you drew benefits in excess of this amount you would have faced an additional lifetime allowance ‘charge’. Either a total tax of 55% if the excess amount was taken as a lump sum, or 25% on top of regular income tax if taken as a regular income (annuity or income drawdown).
In 2023’s Spring Budget, the lifetime allowance will be scrapped from 6th April 2023.
See also our retirement planning and tax benefits of a pension blog posts.
