Cost of pension tax relief for govt rose 8% in two years

Estimated £41.3bn in 2019/20

clock • 2 min read

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...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

Government again rejects Waspi compensation after review

Government again rejects Waspi compensation after review

DWP: Creation of compensation scheme would be ‘highly impractical’ and ‘time-consuming’

Martin Richmond
clock 29 January 2026 • 3 min read
Pension transfers and the FCA: A well-meaning intervention that risks falling short

Pension transfers and the FCA: A well-meaning intervention that risks falling short

'The secret is giving people the right information at the right time'

Rachel Vahey
clock 28 January 2026 • 4 min read
State pension deferrals: 42,000 who postponed took benefit in 2023/24

State pension deferrals: 42,000 who postponed took benefit in 2023/24

FoI request from provider Royal London

Jenna Brown
clock 28 January 2026 • 3 min read