Cost of Pensions Tax relief Increases to £38.4 billion

Figures have been published by HMRC on the number of individuals contributing to personal pensions and the average amount contributed each year. The statistics provide:
• the value of contributions to non-occupational personal pensions;
• tax relief estimates for employer and individual contributions to personal and occupational non-state registered pension schemes.

The statistics show that gross pension tax relief in 2017/18 is projected to be £38.4 billion, up from £37.3 billion in 2016/17. However, by far the largest element of this is tax relief in respect of employer contributions to occupational schemes, representing around 65% of the cost. Contributions to personal pensions by employers and employees account for around 20% and contributions by the self-employed just 2%. The remainder of the cost is made up of relief on investment income.

Tax collected on pensions in payment also increased to £18.4 billion, up from £17.9 billion in 2016/17. The estimated net cost of pension tax relief therefore increased to £20 billion in 2017/18 up from £19.4 billion in 2016/17.

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