The number of people who have reported that they breached the annual allowance limit for pension tax relief rose by 79 per cent, HM Revenue and Customs has revealed.

According to a freedom of information request by Royal London, breaching the annual allowance limit for pension tax relief rose by 79 per cent from 2012/13 to 2014/15, the latest year which figures are available.

It was revealed that in 2012/13 when the annual allowance was £50,000, 3,900 people stated on their tax return that they had saved more than the limit. This rose to 7,000 people in 2014/15 when the limit had been reduced to £40,000.

It is predicted that this figure is likely to have increased even further in 2016/17 when the high earners’ limit was cut down to just £10,000 following rule changes in April 2016. Those who have defied the limit will face a tax charge to retrieve the tax relief they have received on contributions above the allowance.

Nonetheless, individuals can save above the annual allowance for any given year and still receive additional tax relief by carrying forward unused allowances from up to three earlier tax years. As a result this tax year, 2016/17, will be the last year for unused allowances from 2013/14 to be carried forward. After 6 April 2017, any unused allowance will be lost.

Royal London policy director Steve Webb said: “Pension tax relief has been squeezed year after year, and these new figures reveal a big growth in the numbers paying a tax penalty for being over the annual allowance limit. With a big cut in annual allowances for high earners in 2016/17, many more people risk breaching the limit unless they cut back on their contributions or use up unused allowances from earlier years.

“Savers have just a few weeks to use up spare allowances from 2013/14. It is worth anyone in this position finding out urgently how much they have spare from earlier years and to take impartial advice to help them plan the right level of pension contributions before the end of this tax year”.

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