The HMRC tax revenue from individuals breaching limits on yearly pensions’ savings has been announced as £517m in 2016-17 – a sharp increase from £143m the previous year. Some 16,590 pension savers reported the breach of the annual allowance rate of £40,000 through their tax returns. Only 5,430 individuals reported a breach in the previous year.
At the same time, the taxman’s yield from taxpayers breaking the lifetime allowance reached £102m in 2016-2017, up from £66m in the year before.
The lifetime allowance has been cut from £1.8m in 2012 to just £1m now. The annual allowance was reduced from £255,000 to £40,000 while a new tapered annual allowance has reduced the general limit on a sliding scale down to £10,000 for high earners.
Since ‘pension simplification’ in 2006, total annual allowance tax charges have netted over £1,200m and lifetime allowance breaches have generated a revenue of £335m
With such income-generation possibilities, we may expect to witness further cuts to the allowances in the future.
Are you likely to add to the taxman’s coffers? Your tax liabilities could be mitigated with careful planning ahead of time. For a thorough check of your finances, please contact us on 020 7636 7006.