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Tax relief on UK pension saving rose to 60 billion pounds in 2024-25

The cost of income tax relief on pensions climbed from 48 billion pounds in 2022-23 to 60 billion pounds in 2024-25, with most benefits going to higher-rate taxpayers.

Reported · Written up by our desk · Fund Industry

The Guardian reports that the cost of income tax relief on pension savings in the UK rose from 48 billion pounds in 2022-23 to 60 billion pounds in 2024-25, increasing by about a quarter in two years.

The outlet says roughly 40 billion pounds of the total is absorbed by higher-rate taxpayers, who receive a 40% tax break for pension saving, while standard-rate taxpayers receive a 20% break.

The article argues that because private pensions are enhanced by state subsidies, the tax treatment widens inequality in retirement, effectively giving greater support to those who are better off when they save.

It also contends that longer life expectancy and changing expectations for retirement have altered the role of retirement from a safety net for later life into a period that can last 35 years or more, citing UK life expectancy statistics.

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