The majority (83 per cent) of financial advisers think that the lifetime allowance (LTA) should be scrapped due to the complexity of rules and protections, a survey by Curtis Banks has found.

The firm emphasised that an increasing number of people are affected by the LTA rules, as seen through the number of LTA breaches occurring.

It added that despite multiple forms of LTA being introduced to help protect individuals against LTA reductions, the number of breaches has actually increased “enormously”.

For instance, in the 2011/12 tax year, prior to the first drop in the LTA, there were 940 of LTA breaches, with the total value of the charges standing at £36m.

However, in the 2017/18 tax year, the latest year for which statistics are available, there were over four times this amount, with 4,550 breaches recorded at a total value of £185m.

Curtis Banks pensions technical manager, Jessica List, commented: “The number of clients affected by the LTA has increased dramatically in a short space of time, and multiple forms of protection have added complexity to the system."

List noted that it is "unsurprising" that the allowance is unpopular given the number of breaches, warning however, that to scrap the LTA would be "no small feat" as it is tied to a number of pension rules which would need to be changed at the same time.

She also explained that many advisers fear the government is unlikely to scrap the allowance in the short term as this would be seen as a tax break, at a time when it is trying to find ways to increase tax revenue.

List continued: “Scrapping the lifetime allowance could also have a knock-on effect of increasing the government’s contribution tax relief bill if more people begin to contribute again with no lifetime allowance to consider, so it could be paired with less favourable counter-measures such as drastically reducing the annual allowance.”

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