The number of savers breaching their lifetime allowances appears to have fallen over the past year according to the latest HMRC data.
In response to a freedom of information request, HMRC revelled that the number of people with more than £1m in pensions actively contributing to relief at source schemes fell 37 per cent last year, from 2,700 to 1,700 people.
However the falling value of many pension plans over the past year may have also contributed to these figures, rather than wider understanding of the potential tax implications of an LTA breach.
These figures include both personal Sipps as well as the government backed Nest scheme.
This data, requested by InvestingReviews.co.uk, comes amid widespread reports that the chancellor Jeremy Hunt will extend the current free on the pension lifetime allowance for a further two years. Current this limit is frozen at £1,073,100 to 2025, but this is expected to remain until at least 2027.
This data indicates that there are currently 1,100 taxpayers still paying into personal pension schemes despite existing pots already exceeding this lifetime allowance. This means these savers will be face additional tax charges. Ordinarily this will include a 55 per cent tax charge applied on any excess balance if the saver takes it as a lump sum.
Critics say few people understand how the lifetime allowance works.
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