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FoI reveals surge in Govt lifetime allowance tax take

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Revenues from breaches of the lifetime allowance on pension contributions rose more than three-fold during the last Parliament, official figures reveal.

Figures published following a Freedom of Information request by Suffolk Life show HM Revenue & Customs took in £94.2m in tax as a result of contributions to pots in excess of the allowance in 2014/15.

The 2014/15 take was a slight reduction on the previous year’s high of £98m.

By contrast, the tax office took just £24.9m in 2009/10 (see table at bottom of article).

The figures come a month after Chancellor George Osborne confirmed plans to reduce the lifetime allowance to £1m as part of his July budget.

The lifetime allowance has been £1.25m since April 2014. It was previously £1.5m before being cut by the Coalition Government in the 2012 Autumn Statement.

At the start of the last Parliament the figure stood at £1.8m.

The Government has promised to link the allowance to inflation from 2018.

Tax Year Total
2009/10 £24,858,248
2010/11 £31,404,737
2011/12 £46,953,535
2012/13 £52,995,280
2013/14 £98,013,014
2014/15 £94,200,118

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Douglas Baillie 12th August 2015 at 4:53 pm

    Just wait until the emergency income tax kicks in on Pension Freedoms!

  2. This article doesn’t make sense! The headline is about an increase in the tax take from breaches to the lifetime allowance, yet the second paragraph details the tax take in respect of contributions!
    Tax is only taken from pensions above the lifetime allowance when a BCE occurs, and is either 25% if taken as income or 55% if taken as a lump sum.
    Tax is, however, charged on contributions if they are in excess of the annual allowance, so is this what the FOI revealed as indicated in the second paragraph, in which case the headline is incorrect!
    MM please clarify!

  3. Pensions are now the new tax cash cow. Osborne the hypocrite. I want people to save – so that I can tax them. Oh and while you are at it please don’t save too much.

  4. Elsewhere it’s been reported that “The government is currently consulting on whether to radically overhaul the taxation of pensions”. What a joke that’ll be.

    For the past 30+ years every successive government has been meddling with and generally making a buggers’ muddle of the pensions landscape and, sad to say, the current one seems to be no better than any of its predecessors.

    Is it any wonder that the attitude towards pensions of a very broad swathe of the public is still one of suspicion, confusion, uncertainty and mistrust and that so many people are falling prey to scams that falsely promise “a better deal”? Or are cashing in their funds without properly considering both the short and long term consequences?

    Input allowance cut. LTA cut. Preferential rate pensioner bonds instead of enhanced rate gilts which could give a desperately needed shot in the arm to the flagging annuity market. Proposals to cut tax relief on contributions from higher earners (can the economy afford a 67% uplift to the rate accorded to basic rate tax payers?).

    Whatever happened to simplification? What a con that was.

  5. LTA is a waste of everybody’s time except the tax man. It isn’t applied fairly across different pension types and penalises good investment returns!

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