Current issues on pensions and tax

Tax and pensions are both undoubtedly complex subjects and combining them together can be challenging and fraught with danger.

In this article we will explore the general rules around tax relief the changes which are due to be in place by April 2024 and issues faced by employers.

Note that in this article we use ‘rest of UK’ tax rates. The tax position for Scottish taxpayers will differ due to the divergence of tax rates.

Pensions and tax relief

Tax relief on pensions is a valuable benefit for employees. The way that tax relief is provided for occupational schemes is dependent on the method adopted by the employer with their registered pension scheme. This will depend on whether the pension scheme operates as a ‘relief at source scheme’ or a ‘net pay’ scheme. The terminology of these schemes can be confusing so a brief explanation...