The government is not able to provide an estimate of the fiscal impact scrapping higher rate pensions tax relief would have.

In a written question to the government, crossbench Lord Warner asked what would be the fiscal impact each year, at current prices, if tax relief on higher rate pension contributions was abolished or reduced by 50 per cent.

In response, the Conservative’s Lord Bates said that an estimate on the fiscal impact is not available.

“The impact on tax receipts of restricting or abolishing pensions tax relief for higher rate tax payers would depend on how any changes were implemented and would also be subject to significant behavioural effects,” he added.

For the year 2015-16, the cost of pensions tax relief to the government was £38.2bn which includes employee and employer contributions to occupational pension schemes, personal pension scheme contributions, the investment income of pension funds and contributions to personal pensions and retirement annuity contracts by the self-employed. This has increased by £11.3bn over the last 10 years up from £26.9bn.

Although the subject of pensions tax relief featured heavily during the last coalition government, with the publication of a consultation that provoked industry debate, it was reported former Chancellor George Osborne held back on any changes due to the upcoming EU referendum. Since then the Chancellor Philip Hammond has largely left the topic untouched, except for a reduction of the money purchase annual allowance.

It remains to be seen whether there will be any further news in the Autumn Budget this year.

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