A-Day changes to the pension system mean that thousands of expatriate Britons may be losing out on tax relief on their retirement savings, according to UK banking group HBOS.

Prior to April 6, 2006, or A-Day, people saving for their retirement could take advantage of the so-called ‘basis years’ system. This meant that pension contributions could be based on earnings in the current tax year or any one of the previous five tax years.

Since A-Day, the basis years rule no longer applies and tax relief on personal contributions is only available on 100% of taxable UK earnings for that tax year, or GBP3,600, whichever is the greater.

The change in law has particular significance to expatriate Britons, many of whom may not be aware of the changes and who may not be making the best use of their retirement savings as a result. According to the Office of National Statistics, some 14 million Britons have already relocated abroad permanently since 1955.

David Ogilvie, head of sales, marketing and products at Bank of Scotland International, said: Most people will not realise there has been this change and may continue paying the amount they’ve always done, thinking they are eligible for tax relief on the full contribution.