The overall cost of tax relief rose only slightly from £38.5bn in 2015/16 to £38.6bn in 2016/17, representing a stabilisation after some large increases in previous years, according to latest figures.

HMRC figures showed that well over half the cost of tax relief is in respect of contributions made by employers, particularly into final salary pension schemes.

Tax relief on pension contributions remains low at £700m, barely half the level in 2007/2008.

Commenting on the figures Royal London director of policy Steve Webb said: “Successive Chancellors have viewed pension tax relief as a ‘honey pot’, convenient to dip into whenever they are short of money. But pensions should be a long-term business, and six cuts in the last seven years simply undermines confidence in the system.

“It is time that the Chancellor committed to no more changes to tax relief for the rest of this Parliament, especially now that the cost of tax relief has stabilised, so that people can plan with confidence. Instead, there needs to be a focus on the self-employed whose level of pension saving remains worryingly low.”

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