Savers with incomes of over £150,000 who have inadvertently overpaid as part of their restricted pension contributions are facing surprise tax bills, as the deadline for filing tax returns for 2016/17 looms at the end of January.

New data from the ONS has shown that 131,000 employees earn over £150,000.

Additionally, highly complex rules mean far more people will be impacted than just these employees, as income from other sources like dividends, property and interest are also included, as well employer pension contributions.

Around 364,000 people could be impacted when other income is included. Upwards of 11 million tax returns are due to be completed, with 18% expected to be filed in January based on previous history.

Hargreaves Lansdown senior pension analyst Nathan Long said: “The rules for higher earners wanting to pay into pensions are now fiendishly complex. We expect the last minute rush to file tax returns will leave many realising they face a tax bill courtesy of the latest raid on pensions.

“Employers in London in particular look set to be inundated with queries from higher earners who are facing up to a tax charge. This huge disruption based on a small number of people really highlights the need for wider reform to pension taxation, as opposed to the continued salami slicing we have seen in the past.

“Governments and regulators must realise that while these rules impact on higher earners only, the trickle down complexity to all pension savers is a very high price to pay.”

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