“Lump sum allowance used up” on a P60 or pension statement: what the figure means

A member who has taken tax-free cash may find a line on a pension statement headed something like “lump sum allowance used up”, with a figure beside it. Since 6 April 2024 the lump sum allowance has capped the tax-free cash a member can take across their lifetime: £268,275 as standard, unless they have a protected right to a higher figure (PTM171000). The line is the scheme reporting how much of that allowance its own payments have used. This page explains where the figure comes from, what it leaves out, and how the remaining allowance is checked.

Is it on the P60?

Not as part of the P60 itself. What a P60 must show is set by regulation 67 of the Income Tax (PAYE) Regulations 2003: the tax year, the payer’s PAYE reference, name and address, the member’s name, national insurance number and any reference number, the pay for the year, the tax deducted and the tax code. The lump sum allowance is not one of them. The figure comes from a separate statement that pension tax rules require the scheme to give. If it is printed on or sent with a P60, it is still the scheme’s statement, not part of the P60.

Income Tax (PAYE) Regulations 2003, regulation 67 (Form P60)

What the scheme has to report

Regulation 14 of the Registered Pension Schemes (Provision of Information) Regulations 2006 requires the scheme administrator to give the member a statement showing the amount of the member’s lump sum allowance, and the amount of their lump sum and death benefit allowance, used up (PTM164600). The statement is due at least once in each tax year to a member who is being paid a pension by the scheme, and otherwise within three months of the event when a tax-free lump sum is paid. The amount used at each event is the tax-free amount: a lump sum above the allowance counts only up to what was left, because the rest is taxed as income.

The figure covers only the events under that scheme, plus any events before a transfer whose money the scheme has since received. It does not include tax-free cash taken from other schemes. Before 6 April 2024 the same regulation asked for the percentage of the standard lifetime allowance used, which is why older statements show a percentage rather than an amount.

SI 2006/567, regulation 14 · regulation 14 as it stood before April 2024 · PTM164600

One allowance, several schemes

The allowance belongs to the member, not to the scheme. Three payments use it up: a pension commencement lump sum, the tax-free part of an uncrystallised funds pension lump sum, and a stand-alone lump sum. Pension income does not. Because each scheme reports only its own payments, the running total across all of a member’s pensions is for the member to keep track of. When a new lump sum is paid, the scheme may ask the member how much has already been used and whether other lump sums are being paid at the same time. HMRC’s manual says what happens when that information is missing:

PTM171000

A worked check across three schemes

Take a member with no protection and no pension benefits taken before 6 April 2024. They take a tax-free lump sum of £60,000 from scheme A in the 2024/25 tax year, and £45,000 from scheme B in 2025/26. Each scheme sends a statement. In 2026/27 they ask scheme C for a lump sum of £180,000, a quarter of the pot being crystallised there.

Scheme A’s statement shows £60,000 and scheme B’s shows £45,000. Neither statement is wrong, but neither shows the £105,000 the member has used in total. Scheme C works from the running total, so scheme C’s statement shows £163,275 used, not the £180,000 asked for. The £16,725 above the allowance cannot be paid tax-free. If the scheme’s rules allow, it can be paid as a pension commencement excess lump sum, taxed as income at the member’s marginal rate (PTM171000; PTM177000). Otherwise it stays in the pension and is taxed as income when it is drawn. The same tax-free amounts also use up the lump sum and death benefit allowance, £1,073,100 as standard, which is why the last row still shows headroom (PTM172000); the LSA and LSDBA comparison sets out how the two fit together. The lump sum allowance calculator and the LSDBA calculator run the same engine on your own figures.

PTM171000 · PTM172000 — figures engine-computed against the 2024/25, 2025/26 and 2026/27 configs

Benefits taken before April 2024, and transitional certificates

Regulation 14 asks for the allowance used by relevant benefit crystallisation events, and those can only happen from 6 April 2024 (PTM171000). A member who took pension benefits before then starts the new regime with less than the full allowance. Without a certificate, the transitional rule takes 25% of the lifetime allowance they had used off the lump sum allowance (PTM174100). That deduction is worked out from the member’s pre-2024 history, not from a post-2024 statement, so it has to be added to the statements when checking what is left.

A member with complete records showing that less than a quarter of their pre-2024 benefits was taken tax-free can apply for a transitional tax-free amount certificate, which replaces the 25% deduction with the tax-free amounts actually received (PTM174300). A certificate binds whichever way the evidence falls, and for a living member it has to be issued before they become entitled to the relevant lump sum, so both routes are compared first; see do I need a transitional tax-free amount certificate?

PTM174100 · PTM174300

Checking the allowance left

The remaining allowance is the member’s starting allowance less everything that has used it. In practice that means three steps. Start from £268,275, or the protected figure if the member holds a protection. Take off the transitional deduction for benefits taken before 6 April 2024, or the certified amount if there is a certificate. Add up the “allowance used” figures on the statements from every scheme that has paid a tax-free lump sum since then. What is left is the headroom for the next lump sum. The lump sum allowance explainer covers the protections and the excess, and the lump sum allowance calculator takes the total already used, transitional deduction included, as a single input. For planning and illustration only; this page describes the law and is not tax or financial advice.