Now is not the right time for a formal evaluation of pension tax reliefs, the UK government said in response to a report calling for a “step change” in the administration and understanding of reliefs.
HM Revenue & Customs does not understand the impact of “any of the largest tax reliefs, including reliefs on pensions which were forecast to cost £38 billion in 2018-19″, the House of Commons Public Accounts Committee said in July. The government “has not made any assessment of whether that huge cost actually encourages saving for retirement or reduces dependence on state retirement benefits, or whether it just enables those already saving comfortably to save more”, the committee argued.
There are “vast amounts of tax forgone” through reliefs, Mel Stride, Treasury Committee chair and Conservative member of Parliament, said in July, as he launched an inquiry into “tax after coronavirus”. But the committee has said it will consider the role of reliefs in rebuilding the economy after COVID-19. The inquiry has invited written evidence by December 7.