Question
To ask Her Majesty’s Government what is the current annual cost to the Exchequer of tax relief at the standard and higher rates of tax respectively on contributions to private pensions.
Answered on
19 December 2014
Tax relief on pension contributions is the primary means by which the Government incentivises saving for retirement. The estimated exchequer cost arising from income tax relief on contributions made to private pensions and relief on the investment returns to private pensions in 2012-13 was £34.8bn[1]. Income tax on pensions in payment in the same year was £12.0bn, resulting in a net cost of pensions tax relief of £22.8bn in 2012-13.
[1] This is published in HMRC National Statistics table PEN6, available here: https://www.gov.uk/government/statistics/registered-pension-schemes-cost-of-tax-relief
Figures for 2012-13 are the latest available.