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Salary-sacrifice pension contributions over £2k to face national insurance charge
From April 2029, salary-sacrificed pension contributions above £2,000 will incur National Insurance charges, expected to raise £4.7 billion, aiming to protect public finances and target high earners.
- In her Autumn Budget today, Rachel Reeves announced a £2,000 t cap on salary‑sacrificed pension contributions, with excess amounts now subject to employer and employee NICs.
- Reeves justified the move by saying the system is 'not sustainable for the public finances' and cited projections that salary‑sacrifice costs could 'treble' from £2.6 billion to £8 billion by 2030.
- From April 2029, excess contributions will be treated as ordinary pension contributions and incur NIC at 8% and 2%, with the OBR estimating a £4.7 billion increase in 2029/30 and HMRC data indicating about 7.7 million employees used schemes in 2024.
- Because salary sacrifice currently lowers employer NI, employers may cut pension contributions, reduce pay rises or close schemes as NIC bills rise, British Chambers of Commerce warned.
- The Treasury says the changes start in April 2029 to allow adjustment, but an Office for Budget Responsibility document was released early and critics called the cap a 'stealth tax rise' that could discourage pension saving.
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Salary sacrifice pension schemes to be cut by firms after new cap in Budget
Workers will face cuts to pension contributions by employers because of measures announced in Chancellor Rachel Reeves’s Budget, businesses have warned. The British Chambers of Commerce, an industry group that represents 50,000 companies, told The i Paper that the Chancellor’s decision to cap salary sacrifice schemes will also lead to lower pay rises and hurt economic growth. Reeves has applied a £2,000 annual limit to the amount of salary that …
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Total News Sources39
Leaning Left6Leaning Right1Center17Last UpdatedBias Distribution71% Center
Bias Distribution
- 71% of the sources are Center
71% Center
L 25%
C 71%
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