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.
<p>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<sup><sup>[1]</sup></sup>. 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.</p><p> </p><p> </p><p>[1] This is published
in HMRC National Statistics table PEN6, available here: <a href="https://www.gov.uk/government/statistics/registered-pension-schemes-cost-of-tax-relief"
target="_blank">https://www.gov.uk/government/statistics/registered-pension-schemes-cost-of-tax-relief</a>
<br> Figures for 2012-13 are the latest available.</p><p> </p>
To ask Mr Chancellor of the Exchequer, with reference to the Answer of 20 February
2012 to Question 95617, what estimate he has made of the proportion of income tax
relief on contributions accruing to individuals with an annual income of (a) up to
£19,999, (b) between £20,000 and £44,999, (c) between £45,000 and £74,999, (d) between
£75,000 and £99,999, (e) between £100,000 and £149,999 and (f) over £150,000 in (i)
2010-11, (ii) 2011-12, (iii) 2012-13, (iv) 2013-14 and (v) 2014-15.
<p>The proportion of the cost of income tax relief on pension contributions for the
given income ranges, and years, is provided in the table below.</p><p> </p><table><tbody><tr><td>
</td><td colspan="6"><p><strong>% of the cost of income tax relief on contributions</strong></p></td></tr><tr><td><p><strong>Income
bands</strong></p></td><td><p>2009-10</p></td><td><p>2010-11</p></td><td><p>2011-12</p></td><td><p>2012-13</p></td><td><p>2013-14</p></td><td><p>2014-15</p></td></tr><tr><td><p>Up
to £19,999</p></td><td><p>8%</p></td><td><p>6%</p></td><td><p>5%</p></td><td><p>6%</p></td><td><p>5%</p></td><td><p>5%</p></td></tr><tr><td><p>Between
£20,000 and £44,999</p></td><td><p>31%</p></td><td><p>32%</p></td><td><p>35%</p></td><td><p>37%</p></td><td><p>37%</p></td><td><p>36%</p></td></tr><tr><td><p>Between
£45,000 and £74,999</p></td><td><p>25%</p></td><td><p>26%</p></td><td><p>28%</p></td><td><p>32%</p></td><td><p>33%</p></td><td><p>34%</p></td></tr><tr><td><p>Between
£75,000 and £99,999</p></td><td><p>7%</p></td><td><p>8%</p></td><td><p>8%</p></td><td><p>10%</p></td><td><p>10%</p></td><td><p>10%</p></td></tr><tr><td><p>Between
£100,000 and £149,999</p></td><td><p>8%</p></td><td><p>9%</p></td><td><p>9%</p></td><td><p>7%</p></td><td><p>8%</p></td><td><p>8%</p></td></tr><tr><td><p>£150,000
or more</p></td><td><p>20%</p></td><td><p>18%</p></td><td><p>14%</p></td><td><p>8%</p></td><td><p>7%</p></td><td><p>7%</p></td></tr><tr><td><p>All</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td></tr></tbody></table><p>
</p><p> </p><p> </p><p> </p><p> </p><p>Estimates are based on Surveys of Personal
Incomes with projections for 2012-13 onwards. Historical estimates have been updated
to take into account the latest outturn data and updated projections. Projected years
are subject to uncertainty.</p><p> </p><p> </p><p> </p><p>The effect of the reductions
in the Annual Allowance in 2011‑12 and Lifetime Allowance from 2012-13, as well as
further reductions in both allowances in 2014-15 are reflected in the table. These
restrictions mostly affect individuals with incomes over £150,000 hence the drop in
share of tax relief for these individuals in latter years.</p><p> </p><p> </p><p>Increases
in the Personal Allowance (from £6,475 in 2009-10 to £10,000 in 2014-15) cause a decline
in the share of income tax relief going to those in the “Up to £19,999” income band.
The higher personal allowance reduces the amount of income subject to tax for these
individuals, hence also reduces their share of tax relief.</p>
To ask Mr Chancellor of the Exchequer, with reference to the Answer of 20 February
2012, Official Report, column 643W, on tax allowance pensions, what proportion of
income tax relief on contributions accrued to, or is expected to accrue to, individuals
with an annual income of (a) up to £19,999, (b) between £20,000 and £44,999, (c) between
£45,000 and £74,999, (d) between £75,000 and £99,999, (e) between £100,000 and £149,999
and (f) over £150,000 in (i) 2010-11, (ii) 2011-12, (iii) 2012-13, (iv) 2013-14 and
(v) 2014-15.
<p>The proportion of the cost of income tax relief on pension contributions for the
given income ranges, and years, is provided in the table below.</p><p> </p><table><tbody><tr><td>
</td><td colspan="6"><p><strong>% of the cost of income tax relief on contributions</strong></p></td></tr><tr><td><p><strong>Income
bands</strong></p></td><td><p>2009-10</p></td><td><p>2010-11</p></td><td><p>2011-12</p></td><td><p>2012-13</p></td><td><p>2013-14</p></td><td><p>2014-15</p></td></tr><tr><td><p>Up
to £19,999</p></td><td><p>8%</p></td><td><p>6%</p></td><td><p>5%</p></td><td><p>6%</p></td><td><p>5%</p></td><td><p>5%</p></td></tr><tr><td><p>Between
£20,000 and £44,999</p></td><td><p>31%</p></td><td><p>32%</p></td><td><p>35%</p></td><td><p>37%</p></td><td><p>37%</p></td><td><p>36%</p></td></tr><tr><td><p>Between
£45,000 and £74,999</p></td><td><p>25%</p></td><td><p>26%</p></td><td><p>28%</p></td><td><p>32%</p></td><td><p>33%</p></td><td><p>34%</p></td></tr><tr><td><p>Between
£75,000 and £99,999</p></td><td><p>7%</p></td><td><p>8%</p></td><td><p>8%</p></td><td><p>10%</p></td><td><p>10%</p></td><td><p>10%</p></td></tr><tr><td><p>Between
£100,000 and £149,999</p></td><td><p>8%</p></td><td><p>9%</p></td><td><p>9%</p></td><td><p>7%</p></td><td><p>8%</p></td><td><p>8%</p></td></tr><tr><td><p>£150,000
or more</p></td><td><p>20%</p></td><td><p>18%</p></td><td><p>14%</p></td><td><p>8%</p></td><td><p>7%</p></td><td><p>7%</p></td></tr><tr><td><p>All</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td><td><p>100%</p></td></tr></tbody></table><p>
</p><p> </p><p> </p><p> </p><p> </p><p>Estimates are based on Surveys of Personal
Incomes with projections for 2012-13 onwards. Historical estimates have been updated
to take into account the latest outturn data and updated projections. Projected years
are subject to uncertainty.</p><p> </p><p> </p><p> </p><p>The effect of the reductions
in the Annual Allowance in 2011‑12 and Lifetime Allowance from 2012-13, as well as
further reductions in both allowances in 2014-15 are reflected in the table. These
restrictions mostly affect individuals with incomes over £150,000 hence the drop in
share of tax relief for these individuals in latter years.</p><p> </p><p> </p><p>Increases
in the Personal Allowance (from £6,475 in 2009-10 to £10,000 in 2014-15) cause a decline
in the share of income tax relief going to those in the “Up to £19,999” income band.
The higher personal allowance reduces the amount of income subject to tax for these
individuals, hence also reduces their share of tax relief.</p>
