Low earners in workplace schemes steadily increasing

The number of people earning below the personal allowance threshold who contribute to a net pay or relief at source pension scheme steadily increased over three years, HMRC has revealed.

In an answer to a written question, HMRC showed that the total number increased from 1.7 million in 2014/15 to 2.4 million in 2016/17.

The largest increase in the number of low earners saving was in relief at source schemes, which rose from 600,000 to 1.1 million, while the number of low earners saving into net pay schemes increased from 1.1 million to 1.3 million.

HMRC also revealed that there was a significant discrepancy between men and women.

Only 300,000 men with an income below the personal allowance threshold are saving into net pay schemes, and this had not increased since 2014/15.

In comparison, one million low earning women were saving into net pay schemes, up from 800,000.

There is a similar pattern in relief at source savers, with the number of men increasing slightly, from 300,000 to 400,000 between 2014/15 and 2016/17, while the number of women increased from 400,000 to 700,000 during the same period.

HMRC noted: “There may be individuals who have both relief at source and net pay pension schemes. The relief at source pension schemes data only shows individuals who are part of an employer-sponsored or provided pension scheme.”

Personal allowance thresholds for the respective tax years were £10,000 in 2014/15, £10,600 in 2015/16 and £11,000 in 2016/17, with the government figures rounded to the nearest 100,000.

The figures are produced using HMRC’s ‘real time information data’, combined with the Survey of Person Incomes to obtain information on income and gender.

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