The LTA stood at £1,073,100 when the process began on 5 April 2023 with the removal of the LTA charge. This means that withdrawals can now be made from pensions in excess of the LTA without being subject to the previous rates of 55% for lump sums and 25% for regular drawdowns.

However the policy document subsequently released in July revealed a less favourable amendment.

Under current rules if a person dies under the age of 75 the beneficiaries can inherit their 'uncrystallised' – un-accessed – pension pot tax free. It is often used as a mechanism for succession planning; putting money into retirement savings rather than other investments means it will fall outside your estate on death.

According to the policy document, this valuable exemption looks set to disappear.

Under the proposed changes such uncrystallised lump sums would: 'be counted towards the deceased member’s lump sum tax free limit, and the excess will be taxed at each beneficiary's marginal rate'. The tax free limit has been set at £1,073,100 – the same as the abolished LTA.

The policy document also reveals that uncrystallised pension funds used to purchase annuities or drawdown funds will no longer be tested against the LTA and instead will be subject to income tax at the beneficiary's marginal rate.
If you have recently inherited a pension you should seek financial advice as you may be better off taking the whole amount out as a lump sum.