HMRC stats show sharp rise in people breaching pension tax limits

Chancellor felt ‘forced’ to act as number of people caught increased

Jenna Brown
clock • 5 min read

The number of people who have been caught by the annual allowance (AA) and lifetime allowance (LTA) limits on pension tax relief rose sharply in 2021/22, according to analysis of latest HM Revenue & Customs (HMRC) statistics.

Pension consultant LCP said the increase was part of the reason the chancellor "felt forced" to relax the rules considerably in the March 2023 Budget. The LTA was scrapped altogether during that speech. Latest figures showed for the AA - which remained at £40,000 in 2021/22 but could be reduced to as little as £4,000 for the highest earners - there was an increase in both individual reports through tax returns and via scheme pays. LCP explained the scheme pays option, where typically a defined benefit scheme pays the AA charge in return for a lower pension, increased from 17,280 to 49...

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