Growth in tax benefits on pension scheme contributions slowed to five per cent last year, down from 17 per cent between 2014/15 and 2015/16, Salisbury House Wealth has found.

It’s analysis of HMRC statistics revealed that the value of tax benefits on pensions was £25.6bn in 2018/19, up by 5 per cent from £24.3bn in 2017/18.

Salisbury House Wealth said that the slowdown in growth was likely to have been driven by reductions to the annual allowance, from £80,000 to £40,000 in the last five years.

The figures also showed that the total tax benefits gained on savings and investments in the UK also rose by 5 per cent, from £28.8bn to £30.2bn in 2018/19.

Tax benefits granted on investments had been growing at around 10 per cent per year over the previous three years.

According to Salisbury House Wealth, the rate of growth of those tax benefits granted by the government has been slowing in recent years as it restricts the benefits on pensions and cuts the benefits on products such as the Enterprise Investment Scheme.

Commenting on the analysis, Salisbury House Wealth managing director, Tim Holmes, said: “There are tax benefits up for grabs for individuals which should not be ignored. Effectively using these benefits can really add enormous value when saving for retirement.

“The government wants individuals to save more but it is also being put under pressure to meet budget constraints. Tax benefits available are likely to suffer as result.

“Tax benefits can be really useful, but they should not control how an individual invests, as they may be inappropriate for their risk appetite or the kind of returns being targeted.

“The important thing is to follow a strategy that will meet your investment objectives and obtaining the right financial advice can be crucial in achieving this.”

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