The number of people reporting annual allowance breaches more than doubled in the 2016/17 financial year when the tapered annual allowance was introduced.
A Freedom of Information Act Request from Curtis Banks to HM Revenue and Customs sheds light on how the annual allowance is affecting savers.
The document given to Money Marketing breaks down the total number of people reporting an annual allowance breach and the average excess individuals paid.
In the 2015/16 tax year 8,980 individuals reported they breached the annual allowance and paid £19,933 in average excess over the same period.
This more than doubles the following tax year to 18,930 individuals who reported they breached the annual allowance and paid £29,635 in average excess.
The figures show a three-fold increase in reported excesses since 2011/12, when the annual allowance dropped from £255,000 to £50,000.
Curtis Banks says the fact the figure drops the following year, in 2012/13, suggests some people were simply caught out by the rule change, but figures remained high suggesting many people consciously chose to contribute in excess of the much lower annual allowance.
The FOIA also shows the number of people using scheme pays rules, whereby an annual allowance charge is paid from the person’s pension.
This has remained consistent each year, as does the average amount of the excess being reported by individuals.
Curtis Banks says both these figures could indicate a lack of general awareness of scheme pays as a possible option for paying an annual allowance charge.
Curtis Banks pensions technical manager Jessica List says: “The figures show that the tapered annual allowance is limiting tax relief for thousands of savers who are now contributing in excess of their allowance.
“However, it seems that the tapering rules aren’t deterring these savers from using a pension: the fact that the average excess has increased by more than a third could suggest that many individuals are still contributing as much as they feel they need to, even with a lower amount of tax relief available.”