DWP maintains £10,000 earnings threshold for 2019-2020

For 2019-2020, the government has previously announced that the tax allowance will rise from £11,850 to £12,500.

The gap between the point at which people are enrolled into a pension and the point at which they start paying tax “will become a chasm in 2019” according to Steve Webb, director of policy at Royal London.

The implications are huge: “Hundreds of thousands more workers will find that whether or not they get tax relief will depend on the lottery of what pension arrangement their employer has chosen for them,” said Webb.

Tom Selby, senior analyst at AJ Bell, said: “More than a million people in net pay schemes are already thought to have been affected by this anomaly, which robs them of the valuable tax relief they are entitled to when saving in a pension. It is particularly cruel that this flaw in the system affects the lowest earners.”

He added: “The DWP has now passed the buck to HM Revenue & Customs, hoping that the shift to becoming ‘one of the most digitally advanced tax administrations in the world’ will provide a ready-made solution. But until that happens, this pensions tax injustice will continue.”

Members of ‘relief at source’ schemes get basic-rate relief of 20 per cent automatically, regardless of how much they earn, with higher and additional-rate taxpayers able to claim extra through their tax returns.

Non-earners are entitled to receive tax relief on contributions worth up to £2,880.

But where contributions are taken from net pay – as is the case with a number of major workplace schemes – tax relief is only provided to those who pay tax in the first place.

The government also announced that the lower limit qualifying earnings band would increase from £6,032 to £6,136, which sets the minimum amount that people have to start saving from, and the upper limit, which caps mandatory employer contributions, will increase from £46,350 to £50,000.