HMRC is intensifying its examination of pension tax relief claims from higher earners, as part of a wider initiative to optimise revenue collection.
Reports indicate that from 1 September, the tax authority will be "lowering the threshold" for requiring evidence to support pension tax relief requests, as reported by .
Furthermore, the agency will no longer accept telephone claims. Instead, taxpayers are directed to submit claims online or by post.
Certain individuals will also be "asked to provide evidence where it would not previously have been required".
Labour intends to generate an additional £5bn in tax revenue annually, and among other measures, it has boosted resources for HMRC and invested in technology.
Chancellor Rachel Reeves disclosed in her Spring Statement plans to hire 500 more HMRC compliance staff, which was in addition to the 5,000 new compliance staff announced at the Autumn Budget.
Under the existing system, taxpayers can contribute a maximum of £60,000 a year into their pension and receive tax relief.
Basic-rate taxpayers automatically receive 20 per cent relief added to their pot, while higher earners paying 40 per cent or 45 per cent tax may need to claim the extra tax relief via their self-assessment tax return.
HMRC stated these changes were implemented to "protect taxpayers' money" after an internal review discovered some workers were making incorrect claims for pension tax relief.
Pension tax relief claims
A review of claims for relief up to £10,000 has revealed that nearly a third were for incorrect amounts.
The most frequent errors included claiming without higher-rate taxpayer status, seeking relief under a "net pay" arrangement where it had already been granted, and providing estimated rather than exact contribution figures.
Approximately 80,000 claims for Personal Pension Relief are submitted to HMRC annually.
According to the HMRC annual report, income tax relief on pensions is estimated to have cost the Treasury £29.5bn in the 2024-25 tax year, an increase from £22.7bn five years earlier.
An HMRC spokesperson told the Telegraph: "We're lowering the threshold to ensure that people claim the right amount of relief and protect taxpayers' money. This comes after we conducted a review which revealed that many claims below the current evidence threshold were incorrect."
This news arrives as tax-free lump sum withdrawals from pension pots could be reduced as Reeves searches for new methods to fill a £50bn gap in public finances.
Ahead of the Autumn Budget, the Chancellor is reportedly contemplating reducing the amount of money pensioners can withdraw from their savings pot tax-free to as little as £40,000, a move expected to generate more than £2bn for the Treasury.
