Pension Commencement Lump Sum (PCLS)
What is PCLS?
PCLS, which is often known as ‘tax free cash’ or a ‘tax free lump sum’, is a tax free payment which most people can receive when they start accessing their pension benefits. It is normally 25% of the value of the pension benefits being accessed.
The lifetime allowance was abolished on 6 April 2024. In its place, two new allowances were introduced:
- Lump Sum Allowance (LSA): This limits the amount most people can take as a tax-free lump sum during their lifetime.
- Lump Sum and Death Benefit Allowance (LSDBA): This limits the amount which can be taken as a tax-free lump sum during lifetime or following death before age 75.