§ Baroness Greengrossasked Her Majesty's Government:
How much was spent in 2001–02 on tax relief for private pension contributions; and [HL21]
What amount would have been spent in 2001–02 if tax relief for private pension contributions had been restricted to the basic rate of taxation. [HL22]
§ Lord McIntosh of HaringeyEstimates of the cost of tax relief on private pension contributions are contained in table 7.9 ofInland Revenue Statistics. The latest version is on the Inland Revenue website: http://www.inlandrevenue.gov.uk/stats/pensions/p t09 1.htm
Of the estimated £6.4 billion relief on contributions by employees and the self-employed in 2001–02, around £3.7 billion is in respect of higher rate taxpayers, and on employer contributions of the total of £9.5 billion around £5.4 billion is in respect of higher rate employees. These amounts do not represent the yield from restricting relief to the basic rate as there could be a significant behavioural response.
The employers' component is estimated on the basis that under present arrangements, employer contributions are not taxable as a benefit in kind of the employees. The estimates assume that the proportion of total employers' contributions relating to higher rate taxpayers is the same as that observed for employee contributions.