The number of people caught by the lifetime allowance (LTA) is predicted to hit 29,757 and raise nearly £1.5bn in tax by 2025.

Canada Life’s forecast shows more people will be caught each tax year and that means the total value of charges will increase accordingly.

The LTA was introduced in the tax year 2006-2007. It is the total amount an individual can build up in pension benefits without incurring a tax charge.

At the time of its introduction, the LTA was fixed at £1.5m. While it has been increased in the following tax years, the LTA has been constantly reduced since 2012-2013.

The last tax year on record is 2019-2020 when the LTA was £1.055m. In that period, it affected 8,510 people and brought the government £342m in taxes.

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