Pensioners: Income Tax
The question
To ask the Chancellor of the Exchequer, what recent assessment she has had made of the potential merits of extending tax relief for pension contributions for people aged 75 and over.
Answered by Torsten Bell
The Government wishes to encourage pension saving, to help ensure that people have an income, or funds on which they can draw, throughout retirement. This is why, for the majority of savers, pension contributions are tax-free. This makes pensions tax relief one of the most expensive reliefs in the personal tax system. In 2023/24 Income Tax relief on total contributions and investment income of pension funds and National Insurance relief on employer contributions for pension savings cost the Exchequer £78.2 billion, with around 68 per cent of Income Tax relieved at the Higher and Additional rates.
Ending the provision of tax relief on pension contributions at the age of 75 is a longstanding feature of the pensions tax system. It is the age at which at which most people will bring or will have brought their pension into payment.
The Government does not want pensions to become a vehicle for tax planning, and the Government does not intend to change these rules.
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