Occupational Pensions: Tax Allowances

HM Treasury written question – answered on 19th September 2016.

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Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government how many workers earning below the personal tax threshold were paying into net-pay pension schemes in (1) 2010–11, (2) 2011–12, (3) 2012–13, (4) 2013–14, (5) 2014–15, (6) 2015–16 and (7) 2016–17 to date.

Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government what estimate they have made of the number of workers who earn under £11,000 a year and are contributing to net-pay pension schemes.

Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government what estimate they have made of the number of employers using net-pay pension schemes that are unaware that their workers who earn less than £11,000 a year are unable to receive the tax relief they could receive in a relief-at-source scheme.

Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government what is the total value of tax relief not paid to low-paid workers in (1) 2014–15, (2) 2015–16, and (3) 2016–17 to date, as a result of those workers contributing to a net pay scheme from which they were unable to receive the tax relief to which they would be entitled in a relief-at-source scheme.

Photo of Lord O'Neill of Gatley Lord O'Neill of Gatley The Commercial Secretary to the Treasury

The Government does not collect data on the number of workers earning less than the personal allowance who are also members of pension schemes that operate a net pay system. The Government does not hold employee level data on employees enrolled in net pay pension schemes, as such schemes are not obliged to report pension contributions to HM Revenue and Customs. The Government does not therefore hold information on the value of tax reliefs paid out to employees in net pay schemes.

However, the Pensions Regulator provides guidance to employers on choosing a pension scheme for their staff in order to discharge their statutory obligations under automatic enrolment. This guidance covers the choice between net pay and relief at source schemes, and the implications of net pay schemes for employees who do not pay tax.

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