HL Deb 22 July 1998 vol 592 cc103-4WA
Baroness Castle of Blackburn

asked Her Majesty's Government:

What has been the cost in terms of loss of revenue of the tax relief granted on contributions to personal pensions since they were introduced; what is the current annual cost; and what would be the cost of extending such tax relief to contributions to SERPS. [HL2762]

Lord McIntosh of Haringey

The annual cost of income tax relief at the basic rate for the employee part of the national insurance rebate for those contracted out of SERPS into appropriate personal pensions is shown in the table below. The additional cost of tax relief if all those currently in SERPS contracted out of SERPS and into personal pensions is tentatively estimated at around £300 million each year at 1998–99 levels of earnings.

Contributions made by individuals to personal pension schemes also enjoy income tax relief, and if an employer contributes to a personal pension, the contribution is allowable as a business expense and is not regarded as income or taxable benefit of the employee. The total cost of income tax relief for contributions to personal pensions including retirement annuity premiums and FSAVCs is published annually in Inland Revenue Statistics.

Basic rate tax relief on national insurance rebates paid to appropriate personal pension scheme administrators
Year £ million1
1988–89 37
1989–90 208
1990–91 172
1991–92 204
1992–93 222
1993–94 240
1994–95 219
1995–96 220
1996–97 224
1997–982 218
1998–993 196
1 Figures are rounded to the nearest £ million.
2 Estimated outturn.
3 Forecast.

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