1.5 million workers paying extra 25% penalty on pension savings – are you affected?


As part of the Conservatives’ winning 2019 General Election manifesto, the Government committed to addressing pension inequality.

The manifesto stated: “A number of workers, disproportionately women, who earn between £10,000 and £12,500 have been missing out on pension benefits because of a loophole affecting people with net pay pension schemes. We will conduct a comprehensive review to look at how to fix this issue.”

Despite the group’s public disappointment, Sizer outlined the LITRG’s ideal approach to addressing the tax inequality.

“While no solution is likely to be entirely straightforward, LITRG believes that we have found a pragmatic way to equalise the cost of pension contributions for all,” she explained.

“Our proposed fix is that HMRC use data they already have, collected via the PAYE ‘real-time information’ system, to identify those taxpayers affected and make a payment to them equivalent to the tax relief they would have received in a relief at source scheme.

“While there have understandably been other priorities over the last 18 months, we now urge the Government to take action to deal with this injustice as soon as possible.”



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