Impact assessment

Pensions Tax Relief: Lifetime Allowance Screening Equality Impact Assessment

Published 10 April 2025

Project objectives

The Lifetime Allowance (LTA) is the maximum amount of tax relievable pension savings an individual can benefit from over the course of their lifetime. Individuals can contribute to their pension over these limits, but they were subject to a tax charge (Lifetime Allowance Charge) on the amount above the allowance. The excess was charged either at 55% where taken as a lump sum, or at 25% where taken as pension.

The government announced that from 6 April 2023 the Lifetime Allowance charge would be removed.​ 

The maximum amount most members can take was frozen at £1,073,100 (25% of this for Pension Commencement Excess Lump Sum). However, members with a protected right on 5 April 2023 will continue to be able to access this right. Pension provider will continue to need to perform the associated calculation or check for their members.​ 

From 6 April 2023, certain payments previously subject to Lifetime Allowance charge will be subject to normal PAYE rules, treated as pension income, and reportable via RTI (Real-Time Information).​ 

Customer groups affected

This is a measure to improve current customer experience. Details on customer impacts and obligations provided below.

What customers will need to do

Pension providers will need to report certain pension lump sum payments via RTI with PAYE deduction made as appropriate. Prior to April 2023 these were reported via the Accounting for Tax Return where the Lifetime Allowance charge was incurred. As mentioned in the project objective, pension providers have been reporting these via RTI since April 2023 using an existing field until required IT changes can be delivered. Pension providers are experienced with making payments through RTI and this change will make it simpler by adding in new data items specific to the types of lump sum payments that need to be reported.

Self Assessment customers will continue to report detail of these payment via Self Assessment annually, however they will declare the income and tax deducted in a different field to those relating to the lifetime allowance charge. Clear guidance, notes, and help sheets will be provided on GOV.UK.

Pension providers will continue to access services for submitting RTI returns as per Business As Usual.

Individuals will be able to access PAYE information relating to the payments reported via their Personal Tax Account.

Self Assessment customers, or agents submitting on their behalf, will continue to access services for submitting Self Assessment returns as per Business As Usual. Pension providers have been reporting these payments through RTI since April 2023, albeit using an existing field. From April 2025 there will be certain lump sum types added to the RTI return which can be selected where associated payment have been made.

Self Assessment customers, or agents submitting on their behalf, will need to report details of these payments in different (existing) fields form April 2024. Guidance has already been updated regarding this. This project will be looking to remove those fields relating to the Lifetime Allowance charge for April 2025 as they are no longer required.

Assessing the impact

We assessed the impact on those in protected characteristic groups in line with the Equality Act and Public Sector Equality Duty and section 75 of the Northern Ireland Act.

There is no evidence to suggest any specific impacts on customers within the following protected characteristic groups: race, sex, gender reassignment, sexual orientation, pregnancy and maternity, marriage and civil partnership, people with dependants and those without (carers), political opinion (in Northern Ireland only).

Disability

Impact on customers

Possible minor impact on some customers due to their disability may have difficulty engaging with changes delivered by HMRC.

Proposed mitigation

Guidance published on GOV.UK complies with Government Digital Service (GDS) standards and GOV.UK style guides.

HMRC has Extra Support Teams which can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally or who need additional support and reassurance.

Digital content can also be provided in a variety of formats, including hard copy, on request. Formats available include: Braille, audio, large print. There is also a zoom facility to increase and reduce font sizes within online content.

Customers also have the opportunity to appoint someone else to deal with HMRC on their behalf, such as an agent.

Age

Impact on customers

Insight suggests varying levels of digital capability and confidence across differing age group, with some groups being more likely to contact HMRC for further support.

Proposed mitigation

HMRC has Extra Support Teams which can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally or who need additional support and reassurance.

Customers also have the opportunity to appoint someone else to deal with HMRC on their behalf, such as an agent.

People who use different languages (Including Welsh language and British Sign language)

Impact on customer

There may be some impacts for customers who first languages are not English or Welsh.

Proposed mitigation

HMRC offers a Welsh language service to customers, where proportionate, in line with HMRC protocol. Forms on GOV.UK can be requested in Welsh.

For any customers whose first language is not English, alternative arrangements can be made for friends and family to interpret or speak on a customer’s behalf. HMRC staff can access interpretation service via ‘Big Word’ to support customers.

British Sign Language services can be provided via the Extra Support Services available to customers.

Part of the project requirements are for businesses to be able to register for the service, submit their return and pay their liability in Welsh. The project is engaged with Welsh Language Unit colleagues in HMRC to ensure that there are communication channels available for customers who are

Welsh language users

Other mitigations include consideration of translation of guidance in Welsh.

We have engaged with colleagues in HMRC’s Welsh Language Unit to ensure Welsh customer needs are met via translation services and guidance is provided to ready them for the change.

Opportunities to promote equalities

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group,

None have been identified.

A full Equality Impact Assessment is not recommended.