The total value of Lifetime Allowance (LTA) charges rose by 21 per cent to £342m in 2019/20, up from £283m in 2018/19, HMRC figures have shown.

The statistics also showed that the total value of contributions reported as exceeding the Annual Allowance (AA) increased to £949m in 2019/20, up from £819m in 2018/19, with 42,350 taxpayers reporting pension contributions exceeding their AA through self-assessment in this period.

Around 21,410 AA charges were reported by schemes through accounting for tax returns, with the total value of AA charges reported by schemes totalling £253m in 2019/20, a 20 per cent rise on the £210m in 2019/19.

"Reductions in the annual and lifetime pensions tax allowances since 2010 have resulted in a significant increase to the number and value of charges," HMRC said. "In particular, the introduction of the annual allowance taper for high earners in 2016 and the reduction of the money purchase annual allowance in 2017."

The figures also revealed that a total of £31.3bn was contributed to the personal pensions in 2018/20, up from £27.9bn in 2018/19, with the value of contributions to personal pensions rising by an average of 11 per cent per year over the past three years.

This is despite the number of members contributing to a personal pension remaining “constant” at 9.4 million from 2018/19 to 2019/20, as the annual average contributions per member has continued to increase, rising from £3,000 in 2018/19 to £3,300 in 2019/20.

Canada Life technical director, Andrew Tully, warned that the figures show a "significant increase" in the LTA charges for the last year, emphasising that around 8,500 people have been hit with an extra tax as a result of this.

"I can only see this charge hitting more people as those using drawdown approach age 75 and face the second check, which will be exacerbated by the fact the allowance has been frozen for the next five years," he continued.

In contrast, however, Tully suggested that the people affected by the AA will "likely fall from this peak, as the effect of increasing the earnings thresholds for the tapered annual allowance came into force on 6 April 2020 and so isn’t reflected in these numbers".

"But the very fact we have annual, lifetime, money purchase and tapered allowances just shows how complicated the pension tax system has become," he continued.

“The pandemic has done nothing to quell the appetite for people to use their pensions like bank accounts. £45bn has been withdrawn flexibly from pensions since 2015 with the trend on an upward trajectory. The genie is well and truly out of the bottle.”

HMRC's figures also showed that gross pension tax relief in 2019/20 has increased by £4.4bn to £41.3bn, although industry expects have warned against a ‘budget raid’ on pension tax relief.

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