Pension warning: More savers may face tax charge up to 55% on pensions | Personal Finance | Finance

Britons should be aware of the dangers of exceeding their Lifetime Allowance (LTA) when saving for retirement. Failing to take heed of the limit could mean people being hit with a tax charge on their savings.

The state pension is not included in the Lifetime Allowance assessment.

The Lifetime Allowance will be frozen at its current rate until at least 2026.

This could mean over time, the impact of inflation could push more and more savers over the threshold and subject them to tax charges.

The LTA was previously much more generous, but it has been tapered down over the years.

The LTA reached its lowest level in 2016/17 at £1million.

Three small increases have been implemented since, taking it to £1,030,000 in 2018/19, £1,055,000 in 2019/20 and finally to its current level of £1,073,100 in 2020/21.

There is also a limit on how much people can save towards retirement in a given year, known as the Annual Allowance.

It is set at £40,000.