New figures from HMRC reveal that the tax authorities collected £164m in pension annual allowance charges last year, with one expert warning that more high-earners are being "caught out" by the charge.
The tax charges are applied when people exceed the £60,000 annual pension contribution allowance limit.
The figure was down significantly, falling by more than half on the previous year according to the data, but the number of people exceeding the limit through self-assessment rose to 30,440.
Savers who self-assessed over-contributed £672m to their pensions, according to the HMRC figures.
Adrian Murphy, CEO of Glasgow-based Financial Planning firm Murphy Wealth, said: “While it is encouraging to see the amount paid in annual allowance charges more than halve compared with the previous tax year, people in the UK are still needlessly paying out £164m for contributing too much to their pension pots.”
He said there were nuances to the data that suggested the issue was affecting some more than others.
Mr Murphy said that the data suggested the 50% increase in the annual allowance from £40,000 to £60,000 from April 2023 had been successful in reducing the overall number of people breaching the threshold via their pension scheme – down to 15,250 from the 2022/2023 peak of more than 55,000.
He pointed out: “The self-assessment figures show a very different trend. The number of people paying an annual allowance charge is actually up nearly one-quarter compared to the previous year to more than 30,400.
“What this suggests is that high earners with complex pension arrangements are still being caught out by complicated pension rules.”