HMRC figures suggest Britain’s highest earners have increased pension contributions to reduce tax bills, with workers in the 40% and 45% bands claiming £1.4bn in pension tax relief in 2023/24, marking a £400m increase, year-on-year. Additional-rate taxpayers more than doubled their claims to £806m after the top-rate threshold was cut to £125,140, while many six-figure earners are using pensions to avoid the effective 60% tax band between £100,000 and £125,140 – and other tax traps such as losing childcare support. Suggesting that higher earners “face a multitude of tax traps,” Sean McCann of NFU Mutual said: “Pension contributions reduce taxable earnings, which can help people escape one or more of these traps.”
