UK. Pension annual allowance penalties leap to £517m
Record 16,590 people paying penalty on 2016-17 pension contributions
The tax take from individuals paying a tax penalty for breaching the £40,000 annual allowance hit £517m ($673m, €580m) in the 2016-17 financial year – a huge increase from £143m in the previous year.
The number of taxpayers reporting this through their tax returns reached 16,590, up from 5,430 in 2015-16.
Meanwhile, the yield from those breaking the lifetime allowance (LTA) in 2016-17 reached £102m, involving 2,120 taxpayers, up from £66m and 1,180 taxpayers in the previous tax year.
The total tax take from annual allowance penalties is £1,288m since 2006’s pension simplification reforms, while the tax take from LTA totals £335m.
The figures will not surprise advisers who have seen successive governments paring back LTA from a peak of £1.8m in 2012 to £1.03m, while the annual allowance has fallen from a 2012 high of £255,000 to just £40,000 now.
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