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The LSDBA: the £1,073,100 ceiling that bites on death before 75

PCLS consumes it quietly alongside the LSA. The cases that surprise are serious ill-health and death before 75 — where the whole lump sum counts.

5 min read · Last reviewed 11 Jun 2026

The second of the two post-LTA ceilings, the Lump Sum and Death Benefit Allowance caps the total tax-free lump sums payable in respect of a member across lifetime and death combined — £1,073,100 as standard. Every PCLS consumes the LSDBA alongside the LSA. The events that consume the LSDBA alone are serious ill-health lump sums and tax-free death benefits, in both cases only where the triggering event occurs before age 75.

A worked death-benefit excess

A member dies at 68 with an uncrystallised £1.2m fund, nominated entirely to one adult beneficiary as a lump sum, no protection, nothing previously used.

Death pre-75 · £1,200,000 lump-sum death benefit · standard LSDBA · beneficiary income £30,000 · 2026/27

Standard LSDBA: £1,073,100
Paid tax-free (capped at remaining): £1,073,100
Excess: £126,900
Tax on the excess — beneficiary’s marginal rate: £51,436.50
Effective rate on the excess: 40.5%

The excess is taxed as the beneficiary's income at their marginal rate — £126,900 stacked on £30,000 of other income spans the basic and higher bands. Under the pre-2024 regime this would have been a flat 55% LTA charge on the excess; marginal-rate treatment is usually better, and it also means a lump sum split across several beneficiaries, or paid as beneficiary drawdown instead, changes the bill.

PTM172000 · PTM173000 · FA 2024 Sch 9 — figures engine-computed against the 2026/27 config

The 75 boundary

Death at or after 75 takes the death benefit outside the allowance test entirely — it is simply taxable income in the recipient's hands, however large. Serious ill-health lump sums work the same way: allowance-tested before 75, taxable income after. PCLS and UFPLS, by contrast, keep consuming the allowances at any age. The planning consequence is that the LSDBA is, in practice, a pre-75 ceiling — and a fund likely to exceed it is a reason to revisit nomination shape (lump sum vs beneficiary drawdown) while the member is alive.

The common error

Treating “tax-free death benefit before 75” as unconditional. It was close to true under the LTA for modest funds; under the LSDBA a seven-figure uncrystallised fund paid as a lump sum will breach the ceiling, and prior lifetime crystallisations (and pre-2024 history via the transitional rules — note the 100% LSDBA default for pre-75 SIH and death events, not 25%) erode it further. Check the position on the LSDBA calculator before assuming the headline.

PTM174200 (transitional LSDBA defaults) · post-75 events: taxable income, no allowance test

Grounding & sources

Allowance value (£1,073,100 standard LSDBA; FP2016 £1,250,000; IP = protected LTA): calc-engine versioned configs per FA 2024 Sch 9 / PTM172000 / PTM176000.
Worked figures (death pre-75, £1,200,000 lump sum, nothing used → excess £126,900; tax £51,436.50 at 40.53% effective on a beneficiary with £30,000 income): computed through the production engine (calculateCrystallisation, scripts/ground-phase-c.mts, 2026-06-10; same engine as /calculators/lsdba).
Pre/post-75 boundary (post-75 SIH and death benefits are taxable income, not allowance-tested; PCLS/UFPLS keep consuming post-75): PTM173000; engine ADR-024.

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