There were a total of 13,080 lifetime allowance (LTA) charges reported by schemes through AfT (Accounting for Tax) returns in 2022/23.
This is according to the latest HMRC annual private pension statistics, published today (31 July).
It represents an increase from the 11,720 LTA charges reported in 2021 to 2022.
The total value of LTA charges reported by schemes in 2022 to 2023 was a record £516m, an increase from £501m in 2021/2022.
In April 2023, the then Conservative government removed the lifetime allowance tax charge and completely scrapped the scheme in April 2024.
The lifetime allowance was £1,073,100, although some individuals had a higher ‘protected’ lifetime allowance.
Any excess benefits above this level were liable to a lifetime allowance tax charge.
This was 55% of the excess taken as a lump sum and 25% plus income tax if withdrawn as an income.
David Brooks, head of policy at independent consultancy Broadstone said: “Under the last government, the lifetime allowance (LTA) was a lucrative source of tax revenue for the Treasury, overseeing a spike in tax receipts until its abolition in the Spring Budget of 2023.
“This was largely due to its reduction to £1m in 2016 and then freezing it in 2020.”
“With the chancellor setting out her game-plan for filling in the hole in the UK’s finances, and with more pain set to come at the Autumn Statement, reviving the LTA may be under consideration given Labour’s previous statements before the general election campaign.
“The balancing act of raising revenue from large pension savings together with the complexity that could emerge from the reintroduction of the lifetime allowance, which limits pension income rather than the current regime that only restricts tax-free cash, will be very difficult.
“It is possible that the chancellor will look at more subtle ways of taxing richer pensioners via National Insurance.”
