21 July 2026
Recent concerns raised by the Low Incomes Tax Reform Group (LITRG) suggest that some employers may be unintentionally applying pension tax relief incorrectly due to confusion between Net Pay and Relief at Source pension arrangements.
Our recent Quick Poll considered how confident pay professionals are in their knowledge and administration of workplace pension tax relief.
The issue centres on the two different methods used to provide tax relief: Net Pay Arrangement (NPA) or ‘Relief at Source (RAS), which can be easily misunderstood, particularly due to the terminology used in payroll systems.
We had 162 respondents.
The results are:
|
Q1. How confident are you that your organisation understands and correctly applies workplace pension tax relief rules? |
Percentage |
|
Very confident – we fully understand the rules
|
49% |
|
Fairly confident – but additional guidance would be helpful
|
36% |
|
Not very confident – the rules can be confusing
|
9% |
|
Unsure – we rely on payroll software or third-party providers
|
6% |
|
Don't know
|
0% |
|
Q2. Do you think employers receive enough guidance with pension tax relief rules in workplace pension schemes? |
Percentage |
|
Yes - guidance is clear and sufficient |
12% |
|
Somewhat - but improvements are needed |
37% |
|
No - the rules and terminology are too confusing |
45% |
|
Unsure - We rely on payroll providers/advisers for this information |
4% |
|
Don't know
|
2% |
The results indicate a relatively high level of confidence amongst pay professionals, as 85% of respondents are either very or fairly confident in how the workplace pension tax relief is applied within their organisation.
Whilst most respondents reported confidence in applying pension tax relief rules, only 12% believe the existing guidance is clear and sufficient. Nearly half of respondents believe the rules and terminology are confusing despite generally confident in applying them correctly.
The results point to an ongoing need for education and practical guidance, particularly around the differences between Net Pay Arrangements and Relief at Source schemes. Additional support in this area may help employers and payroll teams apply the rules with greater certainty.
Thank you for your responses, as always we appreciate your feedback.
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