Member

I understand also that national insurance relief on pension contributions is an anomaly. With tax relief, we are always told that it is tax deferred, not tax never paid, so the incentive is that you get the upfront money and the Government then recover some tax when you get your pension. No national insurance is paid on a pension, so that is pure tax leakage. The Government may want to address that and may also be saying, as I think many people do, that the basic rate tax relief is not sufficient incentive for a basic rate taxpayer compared with a much more generous relief. Basic rate relief is basically £1 extra for every £4 you put in; with 40% taxpayers, for every £3 they put in, the taxpayer gives them another £2. Clearly, that is a much stronger incentive. The 8% national insurance offset in salary sacrifice actually helps to even that out a little bit, but we are taking it away from those basic rate taxpayers, who probably would benefit from it.