The 2017/18 tax year saw an increase in the number of savers taxed for exceeding the pensions annual allowance.

HMRC figures for last year, show 26,550 people with pension contributions exceeding the £40,000 annual allowance - up from 18,500 in 2016/17.

Perhaps unsurprisingly, the Treasury’s tax collections mirrored the trend, growing from £578 million in 2016/17 to £812 million in 2017/18.

In 2007/08 the number of people reporting contributions that exceeded their annual allowance stood at just 230, so the 2017/18 figures represent an 11,443% increase in a decade.

The result for those affected can be tax charges on their savings of 40-45% if pushed into higher income thresholds.

From 2016/17 the tapered annual allowance was introduced for “high earners” with adjusted income of more than £150,000 and threshold income over £110,000.

The standard annual allowance of £40,000 is reduced by £1 for every £2 of adjusted income an individual has over £150,000 down to a minimum of £10,000.

Helen Morrissey, pension specialist at Royal London, said:

"This is just the beginning and we will see more and more people being caught out by this overly complex regime as time goes on."

We can help

Talk to us if you are affected by the pensions annual allowance, we can provide you with advice and ideas on other methods of saving and investment if you have reached your annual limit. Call our advisers today on 01483 205890