Total pension tax relief dropping from 2015/16 high

The amount of tax relief provided to pension schemes has declined since 2015/16, according to figures released by HMRC.

In the most recent three years for which there is data, pension schemes have been provided with £20.7bn of tax relief in 2015-16, before dropping to £18.9bn in 2016-17 and £19.0bn in 2017-18.

In the three years beforehand, the figure fell from £19.2bn in 2012-13 to £18.2bn the next year and down to £17.9bn in 2014-15.

HMRC said the figures reflected “the net cost of tax relief on pension contributions and any investment growth within pensions, less the tax paid on payments from pension schemes to those accessing their pensions that year”.

These figures appear to largely represent a drop from earlier in the decade, when schemes were provided with £20.1bn in 2009-10, £24.0bn in 2010-11 and £22.8bn in 2011-12.

However, HMRC caution that “due to substantial revisions to methodology”, the figures from early in the decade were not directly comparable to those from later years.

The data was released after Baroness Altmann asked the government how much the Treasury had provided in tax relief to UK pension schemes in each of the past ten years.

On Friday, Altman warned that the government “should be wary of potential plans to cut higher rate pension tax relief”, adding that reform of pension incentives would be “enormously complicated”.

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