29 September 2020
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1 min read
The Commons Public Accounts Committee says HMRC does not understand the impact of pensions tax relief
The Public Accounts Committee’s recommendation that HM Revenue & Customs (HMRC) should conduct a review into the impact of pensions tax relief has been ruled out by government.
In its response to the committee's report on the management of tax reliefs, the government rejected proposals that HMRC should formally evaluate the impact of pension tax reliefs in order to fully understand their effectiveness.
The committee had been concerned that HMRC did not understand the impact of reliefs on pensions - which were forecast to cost £38bn in the 2018/19 tax year - and did not systematically evaluate the effectiveness of many of the reliefs intended to change behaviour.
But HM Treasury said the government had already undertaken several major consultations on aspects of pensions tax relief over the last few years - including the wide-ranging Strengthening the Incentive to Save consultation in 2015, which found "no clear consensus for reform".
The government did, however, back a number of the committee's other recommendations - including one saying that HMRC should publish data showing who is benefiting from pensions tax relief and split this data by income; groups with protected characteristics such as gender, age, ethnicity; people working in the public and private sectors; and people in defined contribution and defined benefit schemes.
The government said it agreed with this recommendation and would, by December next year, publish data showing who is benefitting from pensions reliefs "to the extent data is available" - but noted there was insufficient data available to produce statistics on all protected characteristics as HMRC was reliant on data collected by third parties. HM Treasury said the government is working towards improving the information that it publishes on pensions tax reliefs.
