Thousands face unexpected tax bills due to 'complex' annual allowance taper

'Fiendishly' hard to understand

Jenna Towler
clock • 4 min read

Rules restricting tax relief on pension contributions for people earning over £150,000 are 'fiendishly complex' and will result in unexpected bills, Hargreaves Lansdown has warned.

The tapered annual allowance for high earners came into effect in the 2016/17 tax year meaning high earners who have inadvertently overpaid will face surprise tax bills as they file returns by 31 January. About 131,000 workers in the UK earn more than £150,000, according to the Office for National Statistics. However, Hargreaves said the highly complex rules mean many more people will be affected as income from other sources like dividends, property and interest are also included, as well employer pension contributions. It said 364,000 people could have to deal with the tapered ann...

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