The tax collected from individuals breaching the Lifetime Allowance (LTA) has rocketed by £97m since it was introduced in 2006, with the latest figures from HMRC showing that £102m in tax was collected from individuals exceeding the allowance during 2016/17, compared with less than £5m in 2006/7 when the LTA was introduced.
Individuals who breach the LTA typically fall into one of three categories according to WEALTH at work. These are employees who are blissfully unaware, employees who think they are a long way off and employees who think they are protected by aren’t.
WEALTH at work director Jonathan Watts-Lay commented: “Reaching the LTA could be closer than many employees think. For example, they may have a number of pension schemes that wen combined with their current pension provision, could exceed the allowance.
“The tax implications could be drastic and could lead to potentially many being hit with unexpected and sometimes unnecessary tax bills.
“Many workplaces now offer support to their employees in terms of financial education, guidance and advice. This approach helps both the employer and the employee by ensuring employees understand all their options before making what could be life-changing decisions, therefore leading to better outcomes.”
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