Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the Written Answer by Baroness Buscombe on 31 October 2018 (HL10750), how many (1) women, and (2) men, recorded in HMRC’s Real Time Information records, earning below the personal tax threshold, were contributing at work to a Net Pay Pension scheme in the tax years after 2016-17; and how often they plan to update these figures.
Answered by Lord Agnew of Oulton
HMRC estimate that 1.5m individuals earning below the personal allowance in 2017-18 made workplace pension contributions via Real Time Information (RTI) using net pay arrangements. About 75% of these individuals are estimated to be female and 25% are estimated to be male.
The personal allowance in 2017-18 was £11,500.
HMRC’s Survey of Personal Income (SPI) and administrative data was used to produce the estimates. The 2017-18 SPI data (published in March 2020) is the latest year available. The SPI is updated annually.
Asked by: Jonathan Reynolds (Labour (Co-op) - Stalybridge and Hyde)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the estimated annual cost of providing tax relief to beneficiaries on pension pots inherited before the recipient is 75.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Since April 2015, individuals were able to pass on their unused defined contribution pension savings up to their Lifetime Allowance to any nominated beneficiary when they die, instead of paying the 55 per cent Income Tax charge which applied to most cases prior to that date.
The Exchequer cost of this change was set out at Autumn Statement 2014. In particular, information has been published on page 46 of the ‘Autumn Statement 2014 policy costings’ document, available here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/384071/AS2014_policy_costings_final.pdf
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the Written Answer by Baroness Buscombe on 31 October 2018 (HL10750), how many (1) women, and (2) men, recorded in HMRC’s Real Time Information records, earnt below £12,500 and contributed to a net pay arrangement in the last tax year.
Answered by Lord Agnew of Oulton
HMRC’s Survey of Personal Income (SPI) and administrative data was used to produce the estimates that follow. 2016-17 is the latest year where SPI data is available. The personal allowance in 2016/17 was £11,000, not £12,500 (which is the current personal allowance for 2019-20).
HMRC estimates that a total of 6.8m individuals made workplace pension contributions using relief at source via RTI in 2016-17. Around 45% of these individuals are estimated to be female and 55% are estimated to be male.
HMRC estimates that 1.3m individuals earning below the personal allowance in 2016-17 made workplace pension contributions via Real Time Information (RTI) using net pay arrangements. Around 75% of these individuals are estimated to be female and 25% are estimated to be male.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the Written Answer by Baroness Buscombe on 31 October 2018 (HL10750), how many (1) women, and (2) men, recorded in HMRC’s Real Time Information records, contributed to a relief at source pension scheme in the last tax year.
Answered by Lord Agnew of Oulton
HMRC’s Survey of Personal Income (SPI) and administrative data was used to produce the estimates that follow. 2016-17 is the latest year where SPI data is available. The personal allowance in 2016/17 was £11,000, not £12,500 (which is the current personal allowance for 2019-20).
HMRC estimates that a total of 6.8m individuals made workplace pension contributions using relief at source via RTI in 2016-17. Around 45% of these individuals are estimated to be female and 55% are estimated to be male.
HMRC estimates that 1.3m individuals earning below the personal allowance in 2016-17 made workplace pension contributions via Real Time Information (RTI) using net pay arrangements. Around 75% of these individuals are estimated to be female and 25% are estimated to be male.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how much the Treasury provided in tax relief to UK pension schemes in each of the past ten years.
Answered by Lord Agnew of Oulton
HMRC publishes figures relating to tax relief for registered pension schemes in Table 6 of the publication series ‘Personal pensions: contribution and tax relief statistics’. Table 6 (published in 2019) contains information for the years 2012 to 2013 through 2017 to 2018. Please see below:
Year | Pension tax relief (net of tax received on pension income) (£m) |
2012-13 r | 19,200 |
2013-14 r | 18,200 |
2014-15 r | 17,900 |
2015-16 r | 20,700 |
2016-17 r | 18,900 |
2017-18 p | 19,000 |
The above figures reflect 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. Also, please note:
i. The figures are based on HMRC administrative data and information compiled from a variety of sources by the Office for National Statistics (ONS). Costs are subject to large revisions and have a particularly wide margin of error.
ii. The cost of the tax relief is calculated as the tax that would be paid on contributions to registered pension schemes presuming they were not registered and the payments were subject to the normal tax rules applying to individuals' remuneration. The estimates do not represent the yield from withdrawing tax relief as there would be significant changes in taxpayers' behaviour.
iii. Figures for tax liabilities on pensions in payment are now calculated using administrative taxpayer data on RTI payments made by pension schemes.
Historical figures relating to older years are available on the national archive (see relevant figures below), however due to substantial revisions to methodology, figures for these years are not comparable with 2012 to 13 onwards.
Year | Pension tax relief (net of tax received on pension income) (£m) |
2009-10 | 20,100 |
2010-11 | 24,000 |
2011-12 | 22,800 |
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how many (1) employers, and (2) pension scheme members, have received too much tax relief due to incorrect pension contributions being made as a result of confusion between (a) Relief at Source, and (b) Net Pay, arrangements.
Answered by Earl of Courtown - Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)
Employers have not been given too much or too little tax relief as employers do not receive tax relief under net pay or relief at source (RAS) arrangements.
The information about members is not readily available in the form requested and could only be provided at disproportionate cost.
Errors made by employers and pension providers have resulted in pension scheme members receiving either no tax relief on their pension contributions, or receiving tax relief twice.
In the Pension schemes newsletter 105 (November 2018), HMRC invited pension schemes who think that any of their members have been given the wrong amount of tax relief to email HMRC. HMRC would then work with the scheme to help correct their tax position.
HMRC is continuing to work with the pension schemes that have informed if an error has been made, but is unable to give more detail of these cases as this could prejudice future HMRC compliance activity.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, with respect to the National Statistics data published in April, which estimated the total cost of pension tax relief in respect of registered pension schemes for the year ending 5 April 2018 at £36.3 billion including £4.3 billion in tax relief on employee contributions to occupational pension schemes, (1) what is the estimated figure of gross pension contributions on which this figure was based, and (2) what specific assumptions were made as to the rates of tax applicable in arriving at the figure of £4.3 billion; and whether these assumptions included that all employees making contributions to occupational schemes receive the full tax relief to which they are entitled, including those contributing to net pay pension schemes.
Answered by Earl of Courtown - Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)
HMRC publishes estimates of the cost of pension tax relief which is available in table 6 of HM Revenue and Customs Personal Pension Statistics on Gov.uk.
These estimates were revised on 26th September 2019 as part of an overall update to HMRC’s Personal Pension and Pension Relief statistics. Estimates of the cost of tax relief on contributions are produced using the Annual Survey of Hours and Earnings (ASHE) for income, individual and employer contributions for members of pension schemes that use the net pay mechanism; and administrative data HMRC holds on relief at source administrative data matched to the Survey of Personal Incomes (SPI) - for income, individual and employer pension contributions for members of pension schemes that use the relief at source mechanism.
The cost of tax relief for all contributions made by individuals is approximately £6.3bn, broken down as the cost of relief on employee contributions to occupational schemes (£4.2bn), to personal pension schemes (£1.6bn), and self-employed contributions to pensions (£0.5bn). Occupational pensions here includes some master trust pension schemes which use the relief at source method. Personal pensions here includes workplace personal pension schemes (such as group personal pensions).
i) The £4.3bn figure referenced is the cost of pension tax relief relating to occupational pension schemes. Estimates of the cost of pension tax relief were revised on September 26th 2019 as part of an overall update to HMRC’s Personal Pensions and Pension Relief Statistics. The £4.3bn figure referenced has since been revised to £4.2bn.
This £4.2bn figure of tax relief is derived from around £15.9bn of estimated “relievable” individual pension contributions to occupational pension schemes, (where “relievable” refers to our best estimates of contributions which are within the individual’s pensions Annual Allowance).
ii) Marginal rate tax relief is applied to these estimates of “relievable” contributions as if these contributions were taxed. Estimates are produced assuming all members contributing to all pension schemes receive full marginal rate tax relief on their contributions.
As noted in the publication, costs are subject to large revisions and have a particularly wide margin of error – reflecting the variety of sources of data (both administrative and survey) required to produce these estimates.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of the amount of tax relief forgone in net pay pension schemes by workers earning below the personal tax threshold while contributing to workplace pensions in the past three tax years.
Answered by Earl of Courtown - Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)
Members of net pay pension schemes receive tax relief on their pension contributions at their marginal rate as these contributions are deducted before tax is calculated. Those individuals with income below the personal tax threshold do not pay tax.
Members of relief at source pension schemes, however, receive a 20% basic rate top up on their pension contribution, even though they do not pay tax.
The Economic Secretary to the Treasury provided the Work and Pensions committee an estimate of the cost of providing the same type of top-up as exist for those in relief at source scheme to those in net pay schemes. This estimate was around £100m per tax year.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimates they have of (1) how many higher rate taxpayers fail to claim higher rate tax relief, and (2) how much higher rate tax relief is unclaimed each year, in relief at source pensions.
Answered by Lord Young of Cookham
HM Revenue and Customs can provide estimates of the number of women and men earning income below the personal allowance threshold who contribute to a net pay or a relief at source pension scheme over a three year period. These figures are set out in the table below.
These figures are produced using HMRC’s Real Time Information data to identify taxpayers who contribute to relief at source and net pay pension schemes, which is then combined with the Survey of Personal Incomes to obtain information on income and gender. The most recent tax/year for which these estimates are available is 2016/17.
Number of individuals earning below the Personal Allowance making workplace pension contributions into net pay and relief at source pension schemes (Figures are in thousands)
| 2014/15 | 2015/16 | 2016/17 |
Net Pay | |||
Female | 800 | 900 | 1,000 |
Male | 300 | 300 | 300 |
Total | 1,100 | 1,200 | 1,300 |
Relief at Source | |||
Female | 400 | 500 | 700 |
Male | 300 | 300 | 400 |
Total | 600 | 900 | 1,100 |
Note: (1) Personal Allowances for the respective tax years: £10,000 in 2014/15, £10,600 in 2015/16 and £11,000 in 2016/17; (2) Figures are rounded to neared 100 thousand; (3) Figures by gender may not sum to total due to rounding
Source: Real Time Information and Survey of Personal Income Data for 2014/15, 2015/16 and 2016/17.
There may be individuals who have both relief at source and net pay pension schemes. The relief at source pension schemes data only shows individuals who are part of an employer-sponsored or provided pension scheme.
An estimate of the number of disabled people who earn less than the personal allowance and are contributing to a net pay pension scheme is not available. The relevant HM Revenue and Customs’ administrative data does not contain information on disability.
An estimate for the number of taxpayers with relief at source pensions who fail to claim higher rate tax relief, and how much higher rate tax relief is unclaimed each year, is not available.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether the data gathered by the HM Revenue and Customs Real Time Information programme shows how many disabled people earning less than the personal tax threshold are currently contributing to a net pay pension scheme at work.
Answered by Lord Young of Cookham
HM Revenue and Customs can provide estimates of the number of women and men earning income below the personal allowance threshold who contribute to a net pay or a relief at source pension scheme over a three year period. These figures are set out in the table below.
These figures are produced using HMRC’s Real Time Information data to identify taxpayers who contribute to relief at source and net pay pension schemes, which is then combined with the Survey of Personal Incomes to obtain information on income and gender. The most recent tax/year for which these estimates are available is 2016/17.
Number of individuals earning below the Personal Allowance making workplace pension contributions into net pay and relief at source pension schemes (Figures are in thousands)
| 2014/15 | 2015/16 | 2016/17 |
Net Pay | |||
Female | 800 | 900 | 1,000 |
Male | 300 | 300 | 300 |
Total | 1,100 | 1,200 | 1,300 |
Relief at Source | |||
Female | 400 | 500 | 700 |
Male | 300 | 300 | 400 |
Total | 600 | 900 | 1,100 |
Note: (1) Personal Allowances for the respective tax years: £10,000 in 2014/15, £10,600 in 2015/16 and £11,000 in 2016/17; (2) Figures are rounded to neared 100 thousand; (3) Figures by gender may not sum to total due to rounding
Source: Real Time Information and Survey of Personal Income Data for 2014/15, 2015/16 and 2016/17.
There may be individuals who have both relief at source and net pay pension schemes. The relief at source pension schemes data only shows individuals who are part of an employer-sponsored or provided pension scheme.
An estimate of the number of disabled people who earn less than the personal allowance and are contributing to a net pay pension scheme is not available. The relevant HM Revenue and Customs’ administrative data does not contain information on disability.
An estimate for the number of taxpayers with relief at source pensions who fail to claim higher rate tax relief, and how much higher rate tax relief is unclaimed each year, is not available.