The Treasury is looking at ways in which the administration of pensions tax relief can be reformed. It aims to address the anomalies faced by lower earners, whose ability to claim tax relief on their workplace pensions, and their resultant net pay, depends upon the salary deduction method used by the scheme.

While addressing the needs of nil rate taxpayers, some of the options considered have implications for higher and top rate taxpayers, too. Interested parties have until 13 October to respond.

The Call for Evidence cites two methods of member contribution deduction:

• Net pay, which deducts contributions before tax is calculated

• Relief at source (RAS), which deducts contributions after tax is calculated, with a 20% rate of relief claimed from HMRC and added to the member’s pot.

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