HMRC urged to understand scale of pension tax relief errors

The Low Incomes Tax Reform Group (LITRG) has urged HMRC to establish the scale of pension tax relief errors that employers make.

22 Jun 2026

The Low Incomes Tax Reform Group (LITRG) has urged HMRC to establish the scale of pension tax relief errors that employers make.

The call from the LITRG comes after concerns were raised that leaving the issue unresolved could undermine a new pension top-up payment scheme designed to benefit low-income workers.

The LITRG stressed that the issue has become more urgent following the introduction of an automatic pensions top-up payment for a select group of low-income workers. According to the group, this is intended to 'address the long-standing 'net pay anomaly', under which some lower-income pension savers missed out on pension tax relief'.

Confusion and misunderstanding amongst some employers over the different types of pension tax relief mean that some employees end up receiving more or less tax relief on their contributions than they are entitled to, the LITRG said.

Commenting on the issue, Meredith McCammond, Technical Officer at the LITRG, said: 'We are concerned that firstly, some employers are giving pension tax relief incorrectly to their employees but also that there is little published evidence that the potential scale of the issue has been understood or acknowledged by HMRC. The need to get on top of the issue is made more acute by the impending roll-out of the new government top-up scheme for low-income earners.'