HMRC reveals pension allowance breaches
The amount of savers who were taxed for exceeding the pensions annual allowance in 2017/18 is on the increase.
Figures published by HMRC showed that 26,550 people had pension contributions that exceeded the £40,000 annual allowance last year - up from 18,500 in 2016/17.
Unsurprisingly, the tax collected on behalf of the Treasury mirrored that trend, surging from £578 million in 2016/17 to £812 million in 2017/18.
The number of people who reported pension contributions that exceeded their annual allowance through self-assessment stood at just 230 in 2007/08.
That represents an 11,443% increase in the amount of people breaching the annual allowance over a decade.
Those affected faced potential tax charges of 40-45% on their savings if they fell into the higher-income thresholds.
The amount of tax-free pension contributions that could be made in 2017/18 stood at £40,000, but was restricted for higher earners by the tapered annual allowance.
The taper applies to people with a taxable adjusted income of more than £150,000 and a threshold income over £110,000.
For every £2 of income an individual has over £150,000, their annual allowance is reduced by £1, down to a minimum of £10,000.
Helen Morrissey pension specialist at Royal London, said:
"This is just the beginning and we will see more and more people being caught out by this overly complex regime as time goes on."
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