Call for evidence: Pensions tax relief administration
LITRG’s response to this call for evidence details how we think the Government could fulfil its promise that employees enrolled into workplace pensions under automatic enrolment would get a government contribution to their savings.
At present, where employees earn below (or just above) the personal allowance (£12,500 for 2020/21) and their employer calculates tax relief on their pension contributions using a ‘net pay arrangement’, no (or only little) government contribution is made.
By contrast, low-income employees whose employers use the ‘relief at source’ method to calculate pension contributions, with the pension scheme claiming back tax relief from HMRC, will get a government contribution of 20% – even if they don’t pay tax.
LITRG has been pressing for action on this issue for some years, together with others via the ‘Net Pay Action Group’, which has also submitted a summary response to the call for evidence.
The full responses can be opened using the following links:
Net Pay Action Group – summary response on pension tax relief administration
LITRG – detailed response on pensions tax relief administration