Personal PensionAug 13 2015

Lifetime allowance tax take quadruples in six years

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Lifetime allowance tax take quadruples in six years

Tax revenues from breaches of the lifetime allowance on pension contributions have quadrupled in the last six years, according to figures obtained by Suffolk Life from the government via a freedom of information request.

HM Revenue and Customs took £94.2m over 2014 to 2015 as a result of contributions to pots in excess of the allowance, slightly down from the previous year’s high of £98m.

However, this was a significant increase from the £24.9m taken in 2009 to 2010, rising to £31.4m the following year and up to £46.9m in 2011 to 2012 and £52.9m in 2012 to 2013.

HMRC was unable to provide a breakdown of the figures, blaming the fact that they do not hold this level of detail.

However, the information requested by Suffolk Life’s head of marketing and proposition Greg Kingston does give an indication of the extent of Treasury tax take since the lifetime allowance was introduced almost a decade ago.

The allowance was introduced in 2006 as part of ‘A-day’, initially setting out that a saver could contribute £1.5m into a pension throughout their lifetime without paying tax on contributions.

This rose to £1.8m in 2011, but has since been reduced down to £1.25m and earlier this year the chancellor stated it would drop again to £1m in April 2016.

The government has also promised to link the allowance to inflation from 2018 and is currently consulting on whether to radically overhaul pensions taxation of pensions, with changes expected in the Autumn Statement.

peter.walker@ft.com