Ministers may be tempted to cut pension tax relief The Government could be tempted to cut tax relief on pension contributions, after data from HMRC showed the estimated cost of pension tax relief in 2020/21 is £42.7bn. This is split between £22.9bn in income tax and £19.8bn in National Insurance contributions. Helen Morrissey of Hargreaves Lansdown said pensions tax relief is one of the “biggest burdens the Government must shoulder”. But Steven Cameron, pensions director at Aegon, said the headline figure of how much pensions tax relief costs the Government hides the underlying factors. He added: “Pensions in payment are, after the tax free cash aspect, subject to income tax in payment, so much of the ‘cost’ is temporary.”