Ministers have discussed reducing the rate at which income tax relief is applied to Britainâs 5.5âmillion higher-rate taxpayers from 40p to a flat rate as low as 20p. Another option being considered is to increase the number of very high earners whose income tax relief is cut even further.
The total cost of pension tax relief to the Exchequer is ÂŁ42.7âbillion, of which ÂŁ22.9âbillion is relief on income tax and ÂŁ19.8âbillion is on National Insurance contributions.