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<p>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> </p><p>The proportion of the cost of income tax relief on pension
contributions for varying income ranges and years, is provided in the table below.</p><p>
</p><table><tbody><tr><td> </td><td colspan="6"><p>% of the cost of income tax relief
on contributions</p></td></tr><tr><td><p>Income bands</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>Estimates are based on Surveys of Personal Incomes with projections
for 2012-13 onwards. Projected years are subject to uncertainty.</p><p> </p><p> </p><p>
</p><p>An estimate of the potential savings to the public purse of abolishing higher
rate tax relief on private pension contributions is not available. Revenue effects
would depend on how changes were implemented and would likely cause significant behavioural
effects.</p><p> </p><p> </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>
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