UK pension tax breaches surge as HMRC reports £672 million excess contributions

HM Revenue & Customs (HMRC) disclosed that 30,440 pension savers exceeded the £60,000 annual allowance in the 2024/25 tax year, a 22 % increase from the previous year. The total value of contributions above the limit rose to £672 million, up 33 % from £505 million in 2023/24. Analysts attribute the rise to higher earnings, inflation‑driven salary growth, challenges in defined‑benefit schemes and generous public‑sector pay settlements.

Separately, the Labour government’s upcoming inheritance‑tax reform, slated for April 2027, will bring unused defined‑contribution pension pots into the tax net for the first time. A Hargreaves Lansdown survey found one in four savers plan to withdraw tax‑free cash now to reduce estate values, and many are seeking financial advice ahead of the change.