Now: Pensions has announced that for the 2016/2017 tax year, it will again make up the income tax relief shortfall for members of its scheme who are not tax payers.

Non-taxpayers are typically those earning less than £11,000 and they are currently missing out on the tax relief they would receive in a 'relief at source' scheme.

The majority of occupational and trust based schemes operate on a net pay basis, Now: Pensions is the only net pay scheme to offer a top up to its membership.

Troy Clutterbuck, interim CEO of Now: Pensions said: "Net pay offers savers several benefits but, through no fault of their own, non-taxpayers continue to miss out on the government top up they would receive in a relief at source scheme."

"To address this inequality, for a second year, we are putting our hands in our own pockets to top up these members' pension pots."

Now: Pensions says that while the amount these savers are missing out on is relatively small, around £10 per year for somebody earning £11,000, as the nil rate tax band rises this amount is going to increase.

"We continue to talk to the Treasury and HMRC to find a way to resolve this anomaly over the long term, but progress has been disappointingly slow and a solution to this problem remains elusive, Clutterbuck said.

Members of pension schemes who don't pay income tax, are permitted to basic rate tax relief (20%) on pension contributions up to £2,880 a year, which means HMRC will top up a net contribution of £2,880 to a gross £3,600.

However, this tax relief is only available where the pension scheme operates on a relief at source basis – it is not available for schemes that operate a net pay arrangement.

Members of Now: Pensions schemes who do not pay income tax will be able to claim the relief by filling in a claim form so Now: Pensions can liaise directly with HMRC.

First published 14.09.2017

Lindsay.sharman@wilmingtonplc.com