What is the difference between the LSA and the LSDBA?

The lump sum allowance (£268,275) caps tax-free lump sums you take in your lifetime. The lump sum and death benefit allowance (£1,073,100) caps tax-free lump sums across life and death. The LSA is a sub-limit within the LSDBA.

Does taking tax-free cash use up both allowances?

Usually by the same amount for an ordinary pension commencement lump sum or the tax-free part of a UFPLS. Scheme-specific protected lump sums have a separate LSA deduction rule, which can make that deduction smaller; their full tax-free amount still uses the LSDBA. Lifetime tax-free cash therefore also erodes the death-benefit allowance.

What is the LSDBA for 2026/27?

The standard lump sum and death benefit allowance is £1,073,100 — the same figure as the old lifetime allowance, but now a ceiling on tax-free lump sums (including death benefits before 75 and serious-ill-health lump sums) rather than on total pension value.

What happens above the allowance?

The excess is taxed at the recipient’s marginal income tax rate. The old lifetime-allowance charges (55% on lump sums, 25% on income) went a year before the allowance did: they were removed from 6 April 2023 by Finance (No. 2) Act 2023, and the allowance itself was abolished from 6 April 2024.

Lump sums and protections · The allowances

LSA vs LSDBA: the two lump-sum allowances, compared

Two allowances replaced the lifetime allowance in 2024. One caps tax-free cash taken in life. The wider one also catches lump sums paid on death before 75.

3 min read · Last reviewed 1 Oct 2026

— In short

The lump sum allowance (LSA), £268,275, caps the tax-free lump sums a member can take in life. The lump sum and death benefit allowance (LSDBA), £1,073,100, caps tax-free lump sums across both life and death, including death benefits before 75 and serious-ill-health lump sums. The LSA is a sub-limit within the LSDBA, so lifetime tax-free cash erodes both. Any excess is taxed at the recipient's marginal rate.

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When the lifetime allowance was abolished on 6 April 2024, two new allowances replaced it. The lump sum allowance (LSA) — £268,275 — caps the tax-free lump sums you can take in your lifetime. The lump sum and death benefit allowance (LSDBA) — £1,073,100 — caps tax-free lump sums across both life and death. The LSA sits inside the LSDBA.

Side by side

The two allowances (standard figures, 2024/25 onwards)

Lump sum allowance (LSA): £268,275
Lump sum & death benefit allowance (LSDBA): £1,073,100
LSA — what it covers: tax-free cash in life (PCLS, tax-free part of UFPLS)
LSDBA — what it covers: the above PLUS tax-free death-benefit & serious-ill-health lump sums
Relationship: LSA is a sub-limit within the LSDBA
Excess over the allowance: taxed at the recipient’s marginal rate

£268,275 is exactly 25% of the old £1,073,100 lifetime allowance — the tax-free-cash entitlement carried straight into the new regime. The LSDBA keeps the full £1,073,100 figure. It is now a ceiling on tax-free lump sums, not on total pension value.

How they interact

An ordinary pension commencement lump sum, or the tax-free part of a UFPLS, normally uses up both allowances by the same amount. Scheme-specific protected tax-free cash is different: a separate rule can reduce its LSA deduction, while the full tax-free amount uses the LSDBA (FA 2004 Sch 36 para 34A; ITEPA 2003 s.637S). With no protection, someone who takes their full £268,275 of tax-free cash has exhausted the LSA, but still has £804,825 of LSDBA left (£1,073,100 − £268,275) — and that remaining headroom only matters for a serious ill-health lump sum or a lump sum paid on death before 75.

The events that test against the LSDBA only are the ones that can't happen in ordinary lifetime drawdown: a tax-free lump sum paid on death before age 75, and a serious-ill-health lump sum. Past 75, lump-sum death benefits don't test against the LSDBA. For an uncrystallised-funds lump sum, a qualifying individual pays income tax, while a non-qualifying recipient can trigger the scheme administrator's 45% special charge (ITEPA 2003 s.637J; PTM073010). The excess over either allowance is taxed at the recipient's marginal rate, not at a flat lifetime-allowance charge — the old 55%/25% charges are gone.

The frequent confusion is treating the two as one number, or assuming the LSDBA is a fresh £1,073,100 on top of the LSA — it isn't; lifetime cash erodes both. Model the in-life cap on the LSA calculator and the death-benefit side on the LSDBA calculator. The detail of each is in the LSA explainer and the LSDBA explainer.

PTM171000 (LSA) · PTM172000 (LSDBA) · FA 2024 Sch 9 (abolition of the lifetime allowance)

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Common questions

What is the difference between the LSA and the LSDBA?: The lump sum allowance (£268,275) caps tax-free lump sums you take in your lifetime. The lump sum and death benefit allowance (£1,073,100) caps tax-free lump sums across life and death. The LSA is a sub-limit within the LSDBA.
Does taking tax-free cash use up both allowances?: Usually by the same amount for an ordinary pension commencement lump sum or the tax-free part of a UFPLS. Scheme-specific protected lump sums have a separate LSA deduction rule, which can make that deduction smaller; their full tax-free amount still uses the LSDBA. Lifetime tax-free cash therefore also erodes the death-benefit allowance.
What is the LSDBA for 2026/27?: The standard lump sum and death benefit allowance is £1,073,100 — the same figure as the old lifetime allowance, but now a ceiling on tax-free lump sums (including death benefits before 75 and serious-ill-health lump sums) rather than on total pension value.
What happens above the allowance?: The excess is taxed at the recipient’s marginal income tax rate. The old lifetime-allowance charges (55% on lump sums, 25% on income) went a year before the allowance did: they were removed from 6 April 2023 by Finance (No. 2) Act 2023, and the allowance itself was abolished from 6 April 2024.

Sources

Based on HMRC’s Pensions Tax Manual (PTM171000, PTM172000) and Finance Act 2024 Schedule 9.

For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.