Lifetime allowance lifeline thrown as HMRC withdraws appeal

Savers who accidentally breach their lifetime allowance fixed protection terms could be spared substantial tax bills after HMRC withdrew an appeal in a key court case.

In November 2018 the First-tier Tribunal had found in favour of the taxpayer Gary Hymanson when he claimed he had accidentally failed to cancel a direct debit to his pension scheme which HMRC argued should void his £1.8m lifetime allowance fixed protection. 

The loss could have left him with a large tax bill because his lifetime allowance – £1.8m – would drop nearly £800 000 incurring a 55% tax charge.

HMRC has confirmed it will not appeal the ruling.

Tom Selby senior analyst at AJ Bell said: ‘The fact HMRC appears to have admitted defeat in this case suggests those who make similar genuine errors in relation to their lifetime allowance – errors which in some cases could lead to six-figure...