Dear chancellor – please do more to solve our pension conundrum!

18 Mar 2013

  • £2.6bn set to remain unused in pension tax relief this year – the biggest contributor to the nation’s tax waste mountain
  • While new state pension rules are set to be fast tracked, complex pension system means 28% of advisers say pension tax relief is the most confusing tax area for people to understand
  • call on the nation to take #TaxAction and seek professional financial advice on their retirement and tax planning needs

With the Budget just days away and speculation rife as to what will be announced, the Chancellor has made an early statement confirming that the flat-rate state pension will be brought forward to 2016. While the early introduction is certainly a boost to savers, following two years of various changes to the UK’s pension system the 2013 Tax Action research1 shows that pension tax relief is one of the most underused areas of tax relief in the UK – contributing to over half of the nation’s £4.6bn tax waste mountain.

According to the research, £2.6bn in pension tax relief looks set to remain unused this year. More than one in four professional financial advisers2 (28%) name pension tax relief as the most confusing area of tax for people to understand, only eclipsed by inheritance tax.

Table 1: Tax clients find most confusing

IHT Relief


Pension tax relief




Tax relating to savings income




Gift aid / charitable donations


Stamp duty



The latest HMRC figures show the average pension contribution made by individuals per year is £3,010.  Based on this level of contribution, and the lack of pension scheme take-up, employees could boost their pension pot by as much as £602 each and £2.6 billion collectively, simply by taking advantage of tax relief on pension contributions, and this is just for basic rate payers.  Tax relief on pension contributions is even more important for higher rate taxpayers, who need to actively claim back the additional tax relief owed to them.

The Tax Action research shows that taxpayers are set to waste as much as £4.6 billion this year simply by not being as tax efficient as they could be, equating to an average £153 per UK taxpayer3.

Tax waste split by four areas:

When asked why taxpayers weren’t doing anything to lighten their tax load, nearly one in three (30%) financial advisers said their clients hadn’t done anything because they didn’t know how to go about it; 23% said clients felt they couldn’t control the amount of tax they paid and 16% said clients put it off because they didn’t know who to ask for help.

Karen Barrett comments: “Our stats show that we all need to take tax action and tackle the huge amount of money we could instead be utilising to boost our retirement income.  Pensions and retirement planning can often be pushed back to the bottom of our to do list, replaced in favour of things that seem more immediate and pressing, but we need to remember that  taking action now will provide our income in the future.

“You don’t need to be an expert in retirement planning and pensions tax relief yourself – that is what professional financial advisers are there for.  Of the nearly 500,000 searches going through our ‘find a professional adviser’ search every year, the top area of finances people seek advice on has consistently been retirement planning, clearly highlighting just how important this area is!”

Tracy Ebdon-Poole, Chief Executive of TaxCalc says: “Tax can be one of the most complex and confusing areas to navigate and our research clearly shows that as a nation we are struggling to be as tax efficient as we could be.  While the way tax impacts us will differ from person to person, it’s worth taking the time to see how much of a difference it could make to your pocket and ensure you pay only what you owe.”

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Notes to editors:

  1. 2013 Tax Action research has been carried out by Opinium Research on behalf of and TaxCalc.  Based on desk research by Opinium Research: 4,284,100 adults in the UK are currently in employment and not contributing towards a pension however, simply based on their age and earnings, are very likely considering contributing towards a pension.  Multiplying those 4.3 million adults with the annual income tax savings of £602, results in a total avoidable waste of £2,579,028,200 or £2.6 billion
  2. Research carried out online with the financial adviser panel between 1st and 7th March 2013 among a sample of 101 financial advisers
  3. Based on the average number of taxpayers, according to HMRC: This calculation is based on the overall amount of tax wasted across different groups of taxpayers, and while not every single taxpayer is affected in the same way, the average amount of £153 has been provided to show how much could be wasted across the UK population.

For more information contact:

Anna Schirmer/ Emily Falla/ Maddy Morgan Williams, Lansons Communications: 020 7294 3682

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About TaxCalc

Winners of the Software Satisfaction Awards for the last 5 years running (2008, 2009, 2010, 2011, and 2012), TaxCalc is the UK's leading brand of Self Assessment Tax software.

TaxCalc believe that creating award-winning software takes more than a team of technical minds.  They believe passionately in developing software products that are simple to use, beautifully designed and offer exceptional value for money.

Their UK-based Support Team are on–hand to offer free telephone and email support if required.  They are constantly seeking to improve their software and release free feature-rich updates throughout year.  All of their products are available for purchase and download from the website  They have always believed in making their prices transparent, with no hidden extras.  TaxCalc offers straightforward, affordable, customer-centred and comprehensive tax and accountancy software.  Whether you’re a professional or an individual, TaxCalc works for you.

TaxCalc's Secure Internet Filing confirms instantly that the return has been received by HMRC, that the data has been captured and that the calculations agree.  Tax refunds, if they are due, are also paid more quickly if the return is filed online.

For more information about TaxCalc contact:   Tracy Ebdon-Poole / Alex Rado: 0118 936 4800

Category: Pensions & Retirement Tagged: Tax Relief

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