Pension tax breach less than 4% of UK workforce, says expert

Pension tax breach less than 4% of UK workforce, says expert

It said that the number of people who have already breached the lifetime limit on pensions before paying tax and those who risk breaching it is 1.3 million, less than 4% of the UK's current workforce.

A lifetime allowance is the total amount of money you can build up in a workplace defined benefit pension scheme and savings in a defined contribution pension before you have to pay a further tax charge. The tax is levied on excess over the allowance. The state pension is not included in the calculation.

Beneficiaries from an increase in the allowance will include those who have worked in the public sector for many years. There has been a focus on doctors and consultants - some of whom have retired early or reduced hours for pension tax reasons, as the NHS has become more stretched.

He said that it would be of particular help to those with irregular earnings who were relying on larger pension contributions later in their careers.

Some doctors and consultants have reduced their hours or retired early from the NHS because they were in danger of breaching the lifetime allowance, so they thought that continuing to work was counterproductive for their finances.

Many industries are struggling to recruit workers, but job vacancies are falling. Earlier this year, Mr. Hunt pledged to look at changes to encourage the over 50 s who had taken early retirement during or after Covid to return to work, saying he would look at the conditions necessary to make work worth it. High earners with big pension pots do benefit from inappropriately generous tax treatment of pensions, but there are better ways of restricting this than these crude limits. Carl Emmerson, from the Institute for Fiscal Studies, said he was a leading independent think tank.

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