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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.
Based on HMRC’s Pensions Tax Manual (PTM171000, PTM172000) and Finance Act 2024 Schedule 9.
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— 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
- 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
A tax-free lump sum taken in life — a pension commencement lump sum, or the tax-free 25% of a UFPLS — uses up both allowances together: it reduces the LSA and the LSDBA by the same amount. So 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 on death.
The events that test against the LSDBA onlyare 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 are taxable on the recipient and don't test against the LSDBA at all. 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)
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?
- Yes. A pension commencement lump sum, or the tax-free 25% of a UFPLS, reduces both the LSA and the LSDBA by the same amount. So lifetime tax-free cash erodes the death-benefit allowance too.
- What is the LSDBA for in 2024/25?
- 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 & grounding
Figures: standard lump sum allowance £268,275 and standard lump sum and death benefit allowance £1,073,100 — from the published lump-sum-allowance-explained and lsdba-explained cluster articles (articles-clusters.tsx), grounded in FA 2024 Sch 9 / PTM171000 / PTM172000.
Rule basis: HMRC PTM171000 (lump sum allowance), PTM172000 (lump sum and death benefit allowance) — what each allowance measures and which lump sums test against which. Both replaced the lifetime allowance from 6 April 2024 (Finance Act 2024, Schedule 9).
Relationship (LSA is a sub-limit within the LSDBA; tax-free cash uses both; serious-ill-health and death-benefit lump sums use only the LSDBA): PTM171000 / PTM172000.
For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.
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