HIGH earners could face large tax bills if they fail to declare pension contributions on their 2018/19 tax returns, according to a report.

When completing self-assessment, taxpayers are asked if they have put any money into a pension scheme above the annual pensions allowance.

For most people, this allowance is £40,000 – but for every £2 of income above £150,000, a high earner’s allowance is reduced by £1 to give an alternative figure, known as the tapered allowance.

The maximum reduction is £30,000, so additional-rate taxpayers who earned more than £210,000 in 2018/19 will see their tapered annual allowance reduced to £10,000.

Pension contributions that exceed an individual’s tapered annual allowance will be charged at the taxpayer’s marginal rate, usually 40 per cent or 45 per cent .

A lack of understanding about how the tapered annual allowance works is having dire consequences for those affected, Royal London has claimed.

It suggests these complexities are resulting in some taxpayers being unable to answer how much money has been put into their pension scheme.

Steve Webb, who is director of policy at Royal London, said: “HMRC admits that they know that people are forgetting to put information about their pension tax bills on their annual return.

“But filling in this tax return question requires individuals to understand the system, especially if they are affected by the tapered annual allowance.

“Thousands of people could be set to face huge tax bills because they have innocently failed to declare this information on their tax return.”

The deadline to submit tax returns relating to 2018/19 through self-assessment is at midnight on January 31 2020.

We can process your tax return.

For help and advice, get in touch with Laura Train, at the York office of JWP Creers LLP, at Genesis 5 Church Lane, Heslington, York YO10 5DQ.

Alternatively, telephone 01904 717260.