Members of pension schemes in the UK enjoy tax relief on both their pension contributions and on cash lump sums taken at retirement. Pension income, however, is taxed as earned income under the PAYE system.
This preferential tax treatment is the government's way of incentivising individuals to save towards their retirement, but there are limits to their generosity. There are restrictions on the maximum tax-free benefit you can build up in any single year and the maximum tax-free benefits you can draw at retirement.
The lifetime allowance limits the overall amount of tax-free retirement benefits you can build up. It's expressed as a capital value.For the 2015-16 tax year the limit is £1.25 million. This table will give you an indication of whether you may exceed the lifetime allowance.