Calls for reform as thousands of savers caught in pensions tax trap

The amount of tax charged for people breaching the lifetime allowance (LTA) and annual allowance (AA) limits rose to an eye-watering £283m for the tax year 2018 to 2019

The figures for the lifetime allowance charge, published by HMRC yesterday, was up 6% from £269m in 2017 to 2018. This represents the single biggest amount clawed back in one year since the introduction of the lifetime allowance in 2006.

The total value of AA charges also reported by schemes in 2018 to 2019 was £209m, a 71% increase from £122m in 2017 to 2018.

The total value of contributions reported as exceeding the annual allowance was £817m in 2018 to 2019, decreasing from £912m in 2017 to 2018 and £584m in 2016 to 2017.

The data shows that 34,220 taxpayers reported pension contributions exceeding their annual allowance through self-assessment in 2018 to 2019. They paid an average charge of £23,874.

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