Industry figures blamed the rise on so-called fiscal drag, where people have been pulled into higher tax bands as thresholds and personal allowances remain frozen. The flip side of this is that when they pay into a pension they get more tax relief, leading the cost of tax relief to soar. “But frozen personal allowances mean that the number of pensioners paying income tax has also written steeply, and the tax bill on pensioners is up dramatically. The cost of income tax relief on pensions jumped from £47.8bn in the 2023/24 tax year to £60.4bn in 2024/25, HMRC said. The Government may well conclude that it simply has to live with the rising cost of tax relief for now,” he said.