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Pensions: Taxation

Volume 717: debated on Monday 1 March 2010

Questions

Asked by

To ask Her Majesty's Government how many pensioners, and what percentage of all pensions, they estimate have received pension tax relief at the higher rate of income tax, and subsequently in retirement pay income tax at the basic rate, in each of the past three years for which information is available. [HL1749]

Around £18.9 billion of tax relief was given on pension contributions across all taxpayers in 2008-09. Within this total, an estimated two-thirds of the relief was on contributions made by higher rate tax payers.

However, HM Revenue and Customs does not have sufficient data for enough years about individual taxpayers to build up a history of rates at which pensions tax relief is given, compared with tax rates in retirement, necessary to provide the exact information requested.

Asked by

To ask Her Majesty's Government what is the forecast revenue to the Exchequer of the restriction of pensions tax relief to 20 per cent in respect of taxpayers earning in excess of £150,000 in each year to 2015–16. [HL1785]

At Budget 2009 the Government published the forecast revenue to the Exchequer from the measure “Pensions Tax: restrict tax relief to 20 per cent above £150,000” as follows:

2009

0

2010

0

2011

£200 million

2012

£3.1 billion

The above may be seen on table A1 of the Budget 2009 Report (see item 45 and footnote 4).

There are no published forecasts for this measure for yield beyond 2012-13.

At Pre-Budget Report 2009 it was announced that the income definition would be updated to include the value of the benefit from the pension contributions from the employer subject to an income floor (excluding employer contributions) at £130,000. The floor protects individuals with relatively low net incomes from being caught by the measure, as well as providing certainty for many individuals around whether they are affected, and reducing administrative burdens for schemes.

The forecast revenue resulting from the change in income definition was shown as follows (£ million):

2009-10

-10

2010-11

-40

2011-12

0

2012-13

+500

The above may be seen in table B4 of the Pre-Budget Report 2009.

There are no published forecasts for this measure for yield beyond 2012-13.