Recent data has indicated that the cost of pensions tax relief for employers is £950 million higher than originally estimated.
According to an update on HM Revenue & Customs tax relief estimates, the bill for employer relief on National Insurance Contributions is significantly greater than the forecasted figure.
Falling somewhat short of expectation was personal pension contribution costs, with the total being around £200 million lower than anticipated.
In light of these figures, the expected cost of combined relief will be up on last year’s £39 billion, with the 2017/18 figure standing at approximately £40.95 billion.
Of this total, £16.9 billion is towards National Insurance relief on employer contributions, whilst relief on personal contributions accounts for the remaining £24.04 billion.
Commenting on the figures was Nathan Long. The senior pensions analyst at Hargreaves Lansdown stated: “The overall cost of relief on pension contributions for 2016/17 ended up being higher than anticipated.”
Long says: “The revenue overestimated the relief granted to individuals, but underestimated the cost of relief to employers. This could be attributed to a combination of more employers choosing to operate their contributions through salary sacrifice and larger payments into final salary pensions than anticipated in attempt to shrink scheme deficits.”
