The gross cost of pension tax relief has risen by £4.4bn (8%) from 2017/18 to 2019/20, according to HM Revenue & Customs estimates published on Thursday.
The 8% increase over the two-year period was partly due to the rise in compulsory combined contributions under automatic enrolment from 2% in 2017/18 to 8% in 2019/20. Essentially, when compulsory contribution levels rise, the amount paid out in tax relief will also grow. Out of the total of £41.3bn cost of pension tax relief to the government in 2019/20, almost two-thirds was due to the contributions made by employers into occupational and personal pensions for their employees. In contrast, pension saving by the self-employed accounted for less than 1% of the estimated total cost of tax...
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